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1. SEMINAR
ON
“INDIA AND CHINA GOOD NEIGHBOURS
AND GOOD COUNTERPARTS”
SUBMITED TO SUBMITED BY
PG DEPARTMENT SUKHCHAIN
OF COMMERCE CLASS : B.A.F. 1ST
ROLL NO. : 9007

2. TABLE OF CONTENTS
1. INTRODUCTION
2. RELATIONS BETWEEN INDIA AND CHINA
3. WAR BETWEEN INDIA AND CHINA
4. BORDER DEAL BETWEEN INDIA AND CHINA
5. REFERENCES

3. INTRODUCTION
While China and India’s average incomes remain low, their sustained economic
growth of recent decades combined with their enormous populations (that each exceed the
size of the OECD) has turned both countries into such large players that their economic
scale is only exceeded by the United States, and possibly Japan. So though a large share of
their populations remain poor, both China and India are already heavily integrated into the
rest of the world’s trade and financial flows, making their current and future development
impossible to ignore.
Most recently, as the developed world has slipped into a severe and prolonged
recession – which many observers are calling a depression – China and India stand alone
among major economies in registering positive growth, with the rest of the world’s
economies hoping that these emerging giants will help to bring the rest of the world out of
its deep morass. Nevertheless, these countries are fragile and are still in the midst of
ongoing dramatic structural reforms, facilitated by their governments in some
straightforward as well as peculiar ways.
Recently, the Chinese case has been cited as an example to the most developed
countries of the potential virtues of a state-interventionist growth model to push through
dramatic reforms, which could even be of use to market economies that are facing
difficulty. Though there are many serious proponents of this view, and numerous lessons
that can be learned from each country’s reform chronology, this line of argument may
ignore the most important driving forces of each country’s development.
In the case of China and India, we have two contrasting views. According to the
growth has occurred primarily in spite of the state, rather than because of it. Repeatedly, at
the key inflection points in both economies’ recent growth trajectories, it was those
reforms that reduced state intervention in key markets that created the opportunities that
followed. In China, for instance, the disbanding of collective farms was an early and vital
step, as was the decentralization of state control over business. In India, analogously, the
removal of the licensing regime on business was a fundamental reform. This is not to say
that the role of government was unimportant in either case. The gradual, yet decisive
removal of many sorts of interventions and distortions across both economies is perhaps
the most obvious similarity in their growth experiences. While the process was uneven and
is still very much still ongoing, government decentralization allowed important

4. reallocations to take place, putting resources into increasingly productive use, introducing
growing international competition, and facilitating the productive human and physical
capital investments that enabled growth to accelerate.
Although economic reforms in both countries were essential for the acceleration of
economic growth, the role of the state has remained very important as regards the
stabilization of the growth trajectory. In China the gradualist approach devised by the state
has avoided the severe transitional crisis which struck the former Soviet Union and Eastern
European countries in the early 1990s. The decision to avoid introducing a fully convertible
currency and open the capital account sheltered China from the 1997 Asian Crisis and from
the full effect of the present crisis. In the Indian case, the manipulation of the value of the
Indian currency and the remaining controls on capital movements have contributed to
avoid part of the effects of the world financial turmoil. The step-by-step approach has
proved to be a rather sensible policy. However, in both countries the action of the state in
favour of the basic needs of the poorest part of the population has been manifestly too
weak.
The examines a series of economic and human development indicators for evidence
of the welfare and equity shifts in both economies’ growth performance. He finds that while
both economies were at nearly the same position in terms of material well-being two
decades ago, India was considerably behind in human development terms. And, despite
solid economic performance for the Indian economy, China’s economic development index
grew three times faster over the reform period. Nevertheless, India’s human development
measures have grown more rapidly than China’s, thereby narrowing the gap in
development quality. This is all the more impressive in light of the reduction in the regional
polarization of these human development measures as well across Indian states.
The second contribution discusses the complexity of both economies’ economic
transformations, and the feedback loops that have promoted the development and
transformation of both economies (interpreting it through a fordian lens): by first
increasing their scale, then their profits and investment, and finally facilitating various
types of productivity-enhancing shifts. Evidence for these type of shifts is brought to bear,
which seem likely to continue for some time, as the economies become increasingly
integrated with the global economy.
Françoise Lemoine and Deniz Ünal, examines the nature of these economies’
growing trade integration with the rest of the world, and changing specialization. While
China has become a major hub of the increasingly segmented global production process,
India has become more specialized in certain niche service sectors, with a proportionately
higher price-quality composition. Yet major challenges remain for both: for India to
broaden the industrial base of its economy beyond its current services niche, and for China
to adjust in light of the crisis to improve its terms of trade.
Deals with macroeconomic policies and the exchange rate regimes of both
economies. It suggests that considerable distortions may have been created by the
monetary interventions of authorities that have de facto pegged the exchange rates of both
countries’ currencies, and thereby led to the accumulation of large quantities of reserves,
feeding into imbalances in the global economy that may have even contributed to feed the
current crisis.
However, the exchange rate policies of China and India may have favoured the
export growth of both countries – albeit probably excessively in the case of China – and

5. contributed to partially shelter them from the world financial crisis. The sharp fall of
exports after the eruption of the real effects of the world crisis will probably induce both
governments to try to focus more of their growth on the development of their internal
markets.
Notes:
Heston, A. (2009), ‘What Can Be Learned About the Economies of China and India from
Purchasing Power Comparisons?’, forthcoming in Emerging Giants: China and India in the
World Economy.
RELATIONS BETWEEN INDIA AND CHINA
India and China are two big countries not only of Asia but also of the world. They are two
neighbouring counties and both have also preserved their five thousand years old cultures.
They are agricultural countries and a great majority of population is rural. The lacks of
villages spread all over the country and the rural population have been the main resources
of the cultural expansion as well as of the economic growth of their respective countries.
The authentic details of India’s cultural evolution are found in Indus Valley Civilization
[2500-2000 B.C.]. Then comes the Vedic period [2000-1500 B. C.] when we have the
glimpses of intermittent details of the cultural development. The first detailed and
historical phase of China’s cultural evolution was Shang Yin era [1765-1122 B.C.] and
during the period of Chou [1122-756 B. C.] Chin [246-210 B.C.] and Han [206-220 A.D.] the
Chinese Culture touched some great heights of attainments. This period of Chinese cultural
evolution saw the development of the great philosophies of Confucius and Tao and marks
the beginning of coordination between these philosophies and the Buddhist values. This
kind of coordination found a parallel in India where the two great cultures Dravid-Aryan
coordinated well with each other about 2000 B.C. and later the other cultures that reached
India from time to time harmonized with Indian Culture so well that they became one with
it.
The characteristic of harmony that Indian and Chinese Cultures achieved thousand of years
ago made a great impact on the other countries of the world. As China and India are
neighbouring nations, the quality of harmonization had a particular influence on the
masses of the two countries. It can be noticed in the lives of the people living in the North-
Western regions of India and of those living in the border areas of China.
1. The Indo-Chinese relationship was established long ago in the ancient times, on the basis
of the quality of harmony present in both the cultures. It will require writing a big book to
tell in detail about the long-standing cultural ties. However, I would like to mention in brief
that it was in consequence of the profoundness of these cultural ties that hundred of
Chinese scholars were the student of the famous Nalanda University much before the

6. advent of Christ. The Chinese scholars participated in Buddhist Congregations [Sangeetis]
ahead of others. They were the centre of attraction in the forth congregation [Sangeeti]
held in Kashmir during the reign of Emperor Kanishka in the first century A.D.
From the time onwards and up to the 19th century, the scholars of the two counties visited
each other and strengthened the cultural relationship. In ancient times, if the Indian
scholars like Dharmaratha, Kumarajiva, Buddhajiva, Dharmakshema and Sanghabhuti
visited China, the Chinese scholars Fa-hein, Sung-Yun, It-Sing and Huentsang came to India.
Among them Huentsang was the Chairman of a Buddhist conference sponsored by the
Indian Emperor Harshavardhana. It is not all. The way Huentsang and Fah-Yan enriched
the Indian history by their writings, they became inseparable part of it. In other words, the
Indian history is incomplete without a mention of them. I am, therefore, in a position to say
that the Indo-Chinese cultural relationship is not a past event of history but a reality even
now.
India and China are prosperous countries in many areas and the economic ties between
them were established long ago along with their cultural relationship which afterwards
became firm. In this regard, the first evidence can be traced to Magadh-Maurya era [5th and
6th centuries B.C.] in India. The Gupta period [5th century A.D.] shows further
improvement. We all know about the economic and trade relationship that existed between
the two countries since then to the first half of the 20eth century. It will not be of much
relevance to discuss them here in detail.
After the Second World War the economic order of the world underwent a great change.
Especially in the new economic situation India and China emerged as two great powers. It
was a period of transition and it was extremely necessary to open a new chapter, but
unfortunately there developed an atmosphere of bitterness. Why? It is not relevant to
discuss the reason here, but I would like to add that in spite of this bitterness the two
countries should not ignore the long and firmly established ties between them, nor can they
afford to do so.
The Sino-Indian economic relationship improved again towards the ninth decade of the last
century. The Indian Prime Minister Rajiv Gandhi in 1988, the President K. R. Narayanan in
May 2000, and the Prime Minister Atal Behari Vajpayee went to China on official visit in
June 2003, and Mr. Li Peng and the Chinese Prime Minister Zhu Rong came to India in June
2001 and January 2002 respectively. These visits gave new dimensions to the improvement
of relationship between the two countries and the trade relationship is improving day by
day. The exchange of trade which amounted to 3 billion dollars per annum five years ago
has now gone up to 10 billion dollars per annum. This is good indication but it should be
raised further. There is every possibility for it; especially in the development of
infrastructure for the increase of trade between the North-Eastern regions of India and
Western China. The under developed regions of Burma can also be included in it. In this
direction, the topic of opening of Nathula trade-root has come up. It is a very important
issue that would prove an early solution and beneficial also. It is the demand of time that
the two governments should sit together and think of some more measures as this and the

7. participation of non-government agencies should also be encouraged.
Chinese economy is considered to be an advanced one in the world. It has maintained the
growth rate of 7-8 per cent for the last 7 years. India’s economy is also fast-moving. It has
also the growth rate of 7-8 per cent per annum. But there is still a big challenge for both the
countries to bring the rural population economically at par with the others. Both the
countries can cooperate with each other to a solution of this problem.
The Sino-Indian economic cooperation is now indispensable and their cultural ties can be
the basis of a firm foundation for it. The liberal Chinese Government at present is well
aware of the importance and cooperation of India. Therefore, the steps they have taken to
have good relations with India on the basis of mutual accommodation are praiseworthy.
India also recognizes the importance of China in the economic order of the world. They also
have a keen desire to solve all problems by mutual discussion and create an environment
for long lasting cooperation between the two countries.
The untoward happenings in 1962 created an atmosphere of mistrust in India for their
neighbouring country which more or less still persists. It is essential to transform this
mistrust to trust. If it is achieved, relations between the two countries would strengthen
and would prove to be beneficial to both of them.

8. THE SECRET CYBER WAR BETWEEN INDIA AND CHINA
India discovered deadly Stuxnet internet worm from China targeting Indian strategic
installations, computers, and networks. Bangalore is striking back like never before.
In Bangalore it’s called Chikku Sharbat. Is the nick name of Indian cyber worms that are
creating havoc in Chinese Peoples Liberation Army (PLA). No one knows if and when India
unleashed the ''Sharbat'' in Chikku-land (China). But the Chinese in latest round have
desperately unleashed the deadly Stuxnet internet worm without being able to completely
concealing the identity of the originating identities.
While Chinese hackers are known to target Indian government websites, the scale and
sophistication of Stuxnet suggests that only a government no less than that of countries like
US, Israel or China could have done it. "I think it's more likely that China is behind Stuxnet
than any other country," says American cyber warfare expert Jeffrey Carr.
What is just getting unveiled is the scare among the Chinese Military about Indian Cyber
Missile Chikku Sharbat originating from Bangalore.
One of the solutions may be that US Corporations should keep Bangalore busier with
outsourcing contracts so that Indian cyber hackers working in Bangalore have less time to
go after Chikkuland (China).

9. FUTURE WAR BETWEEN INDIA AND CHINA
India has been buying weapons and trying to build them for decades. It has been buying
junk from Moscow (Flying Coffins) and has been unable to produce weapons on its own.
The list of Indian failures is long. Kevari Engine, Tejas LCA, Trishul, Nag, Agni Arjun and
Brahmos are a few examples of the total failure of the Delhi arms. Indian missile failures
Despite spending humongous amounts of money the bureaucrats of the Ganges have been
unable to make Bharat self-sufficient in arms production. It is the only country of any
sizable size which cannot produce arms that it can export. This colossal failure of the
Bharati arms industry has filtered down to the total lack of any credible manufacturing
from Goa to Gurdaspur.
Of course the Tatas and the Birlas have pulled rabbits out of their hats with huge smoke
and mirrors that make the average Bharati think that the paradise of the shantytowns in
Mumbai that encompass half of the population of the city are part of Shining India. Bharatis
are incapable of looking at the extreme penury around them and blind to the filth right
outside the Delhi airport. They cannot smell the stench of human excrement right outside
the Mumbai airport and oblivious to the fact that 80% of the population takes a dump
every morning on the railway lines. A nation that does not have working toilets for 80% of
its population is proud of the fact that it can turn on a switch on a Russian launcher and a
Soviet era engine designed and made in Moscow. It is disgusting that the country which has
the lowest PER CAPITA GNP in South Asia and has most of the world poor declare itself a
Space power. A society full of untouchable, Sati, widow incarceration, and caste in
incapable of any shine. The Slumdog power has 89 insurgencies with 40% of its territory
under rebel control–this is “Incredible India”. Nothing incredible about the IT power whose
revenues from the Call Centers are half that of IBM. There is no shine in the country where
450 Dalits and Untouchables eek out a living as slaves and 150 million Muslims simply
survive.

10. The Slumdog power mesmerized by Bollywood (filmed outside Bharat) cannot come to
terms with the simple fact that 80% of its population lives below $2 per day with the
hunger index placing it below Burkino Faso. Why doesn’t Russia transfer plane technology
to India?
One out of every 200 Indians is already employed by the Indian Armed Forces. Three out of
every four Indians already live at or less than $2 a day. Bharat Sarkar (the Government of
India) has, however, now jacked up the defence budget by a massive 55 percent. Who is
India going to fight with?
India has 3,773,300 troops, plus 1,089,700 paramilitary forces India’s army is second only
to China in size. The Indian Air Force, with a total aircraft strength of 1,700, is the world’s
4th largest. The Indian Navy already operates some 13 dozen vessels with INS Viraat as its
flagship, the only “full-deck aircraft carrier operated by a country in Asia or the Western
Pacific, along with operational jet fighters.” Who is India going to fight with?
India has six neighbours; Pakistan, Bangladesh, Bhutan, Burma, Nepal and China. India now
spends a colossal $32.35 billion on defence, Pakistan $4.8 billion, Bangladesh $830 million,
Nepal $100 million and Burma $30 million (according to Business Standard, India’s second-
largest financial daily, “There is no apparent reason for India to understate its defence
budget. No IMF conditions constrain defence spending…. But India continues to camouflage
what other comparable liberal democracies transparently show as defence spending).
Collectively, Pakistan, Bangladesh, Burma and Nepal spend $5.7 billion a year on defence.
Who is India going to fight with?
Yes, there’s China and the People’s Republic spends $80 billion a year on defence.
According to a report by Stratfor, the Texas-based private intelligence agency, “China has
been seen as a threat to India, and simplistic models show them to be potential rivals. In
fact, however, China and India might as well be on different planets. Their entire frontier
runs through the highest elevations of the Himalayas. It would be impossible for a
substantial army to fight its way through the few passes that exist, and it would be utterly
impossible for either country to sustain an army there in the long term. The two countries
are irrevocably walled off from each otherl…. Ideally, New Delhi wants to see a Pakistan
that is fragmented, or at least able to be controlled. Towards this end, it will work with any
power that has a common interest and has no interest in invading India.”
To be certain, India and China are not military rivals. Who is India then going to fight with?
Bharatiya Sthalsena (the Indian Army) has a total of 13 corps, of which six are strike corps.
Of the 13 corps at least seven have their guns pointed towards Pakistan. The 3rd Armoured
Division, 2nd Armoured Brigade, 4 RAPID (Reorganised Army Plains Infantry Divisions),

11. Jaisalmer AFS, Utarlai AFS and Bhuj AFS are all aiming at splitting Pakistan into two (by
capturing the Kashmore/Guddu Barrage-Reti-Rahimyar Khan triangle). The News.
Bharatiya Sthalsena Sunday, March 01, 2009 Dr Farrukh Saleem. The writer is the
executive director of the Centre for Research and Security Studies (CRSS).
Yes, there’s China and the People’s Republic spends $80 billion a year on defence.
According to a report by Stratfor, the Texas-based private intelligence agency, “China has
been seen as a threat to India, and simplistic models show them to be potential rivals. .
In fact, however, China and India might as well be on different planets. Their entire frontier
runs through the highest elevations of the Himalayas. It would be impossible for a
substantial army to fight its way through the few passes that exist, and it would be utterly
impossible for either country to sustain an army there in the long term. The two countries
are irrevocably walled off from each otherl…......
Ideally, New Delhi wants to see a Pakistan that is fragmented, or at least able to be
controlled. Towards this end, it will work with any power that has a common interest and
has no interest in invading India.”
To be certain, India and China are not military rivals. Who is India then going to fight with?
Bharatiya Sthalsena (the Indian Army) has a total of 13 corps, of which six are strike corps.
Of the 13 corps at least seven have their guns pointed towards Pakistan. The 3rd Armoured
Division, 2nd Armoured Brigade, 4 RAPID (Reorganised Army Plains Infantry Divisions),
Jaisalmer AFS, Utarlai AFS and Bhuj AFS are all aiming at splitting Pakistan into two (by
capturing the Kashmore/Guddu Barrage-Reti-Rahimyar Khan triangle). The News.
Bharatiya Sthalsena Sunday, March 01, 2009 Dr Farrukh Saleem. The writer is the
executive director of the Centre for Research and Security Studies (CRSS)

12. India and China have signed an agreement in Delhi aimed at resolving a long-running
dispute over their Himalayan border.
India's national security adviser said it was "one of the most significant documents" signed
by the two countries.
The agreement was sealed as Indian premier Manmohan Singh met visiting Chinese
counterpart Wen Jiabao.
The world's two most populous countries fought a bitter war over their largely unmarked
border in 1962.
'Major process'
India's National Security Adviser MK Narayanan told Indian television that Indian and
Chinese officials had worked out a roadmap for resolving the disputed 3,550km (2,200
mile) border.
"It shows a lot of give and take on both sides," he said.
CHINA AND INDIA SIGN BORDER DEAL

13. "We are very hopeful that this document will be the starting
point of a major process in the settlement of the boundary
dispute between India and China."
The joint statement by the two countries did not go into
specifics on the issue, talking of "political parameters" and
"guiding principles".
However, China has now formally given up its claim to the
state of Sikkim.
The joint statement refers to "the Sikkim State of the
Republic of India".
Until now, China had never recognised India's 1975
annexation of Sikkim.
On the remaining issues of contention, the statement said "special representatives" would
negotiate the issues, adding: "Both sides are convinced that an early settlement of the
boundary question will advance the basic interests of the two countries."
Both sides have previously claimed the other is occupying parts of its land.
While India has accused China of occupying territory in Kashmir, Beijing has laid claim to
territory in the north-east Indian state of Arunachal Pradesh.
IT connection
However, analysts say the border differences have been played down in recent times as
China and India developed a blossoming economic
relationship.
In addition to the border plans, Mr Wen said the two
countries had set a target of increasing annual trade to
$30bn by 2010.
China also reiterated its support for India to be given a
permanent seat on the UN Security Council.
On Sunday, Mr Wen visited Bangalore, where he urged
closer ties in the fields of science and technology.
"If India and China co-operate in the IT industry, we will be
able to lead the world... and it will signify the coming of the
Asian century of the IT industry," Mr Wen said.
We are going to put in
place a bridge of friendship
linking our two countries, a
bridge that will lead
both of us to the future
Wen Jiabao
Trade powers ties
Have Your Say
Tibetan exiles have protested
in the past against the border
talks

14. The Chinese premier is on the final leg of his first South Asian tour since taking office last
March
REFERENCE