HU JINTAO FAILS TO COMMIT TO INDIAN RELATIONSHIP

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 008067 SIPDIS SIPDIS DEPT. FOR SCA AND EAP E.O. 12958: DECL: 11/27/2026 TAGS: PREL PGOV PINR ETRD EINV MNUC PARM IN CH SUBJECT: HU JINTAO FAILS TO COMMIT TO INDIAN RELATIONSHIP REF: A. NEW DELHI 7764 B. NEW DELHI 7942 NEW DELHI 00008067 001.2 OF 005 Classified By: DCM Geoff Pyatt for Reasons 1.4 (B, D) ¶1. (C) SUMMARY: There are more questions than answers in the aftermath of Chinese President Hu Jintao's November 20-23 visit to India - the first by a Chinese president in 10 years. While taking moderate strides on economic confidence-building measures, it appears that hopes for forward movement in the relationship were stymied by the deadlock over the Arunachal Pradesh border dispute (reported separately in reftel A),continued PRC unhappiness over Indian security-related investment limits, and China's "higher than the Himalayas" relationship with Pakistan. The initial readout from Dr. S. Jaishankar, the Ministry of External Affairs (MEA) Joint Secretary (Americas) indicated that, contrary to press reports, there was no headway in gaining China's blessings for the India exception in the Nuclear Suppliers Group (NSG),nor any further support for its aspirations as a permanent member of the United Nations Security Council (UNSC). According to the MEA, Beijing also grossly underestimated the power of the press to rally the Indian public against Chinese Ambassador Sun Yaxi's statements regarding China's territorial claims to the entire state of Arunachal Pradesh--86,000 square kilometers of Indian territory with a population of over one million--in the run-up to Hu's India visit. ¶2. (C) Prominent think tankers, journalists, and academics are divided regarding threats posed by an emerged China. However, even the more progressive minds are preaching cautious engagement. The majority agree that the visit was bereft of substance. Rather, the Chinese used stock economic and diplomatic overtures to maintain channels of communication with the GOI in an attempt to "enhance political trust," and the GOI largely acquiesced, placing its front burner issues on the back burner. The utilitarian approach of the visit was highlighted in Poloff's 28 November readout meeting with Chinese Embassy Polcouns, who had seemingly memorized President Hu's joint statement speech, and, after reiterating the agreements inked during the visit (reftel B),stressed "good neighborliness" as an achievement. Most telling was his lack of praise for the President's reception in India while waxing eloquent about the pomp and pageantry arranged by the Pakistanis to greet Hu. The backwards looking focus of the Hu visit stands in stark contrast to our own March Presidential visit. END SUMMARY. -------------- MEA's readout -------------- ¶3. (C) In a 24 November conversation, DCM asked MEA Joint Secretary (Americas),Dr. S. Jaishankar for his views on the SIPDIS Hu visit, including news stories that China was now supporting the US-India civilian nuclear energy agreement. Jaishankar said the press that published such stories were way off-base. The MEA had clearly backgrounded to journalists that the Chinese had not offered much at all on NEW DELHI 00008067 002.2 OF 005 support for the nuclear agreement or for India's exception in the Nuclear Suppliers Group or its UNSC candidacy. In fact, said Jaishankar, he and other MEA types were amazed at how badly the Chinese stage-managed the visit. Instead of focusing on areas of commonality, Beijing had focused almost exclusively on backward-looking liabilities that dated back decades. The Chinese Ambassador's remarks on Arunachal Pradesh had been inadvisable in the extreme; while the Chinese focus on "discriminatory" Indian national security restrictions on Chinese FDI had also soured what had been a positive story on bilateral trade. ¶4. (C) Jaishankar said his MEA East Asia counterpart, Joint Secretary Ashok Kantha, had worked to keep the bad vibes out SIPDIS of the visit, but the Chinese did not pay him enough attention. Another problem was that Beijing underestimated the influence of the Indian press. MEA had been surprised to see how negative and unsympathetic the press had been toward China. A major network, CNN-IBN, which, ironically, was the same network on which the Chinese Ambassador made his ill-advised comments, later wrapped up the Hu visit by saying nothing had been achieved on borders, Chinese aid to Pakistan, Indian membership in the NSG, or India's UNSC candidacy. It was hardly a report that accentuated the positive. Now that Hu had come and gone, added Jaishankar, the Indian government was focused on PM Singh's trip to Japan, while keeping one nervous eye on the dreaded deliverable Hu might announce in Islamabad. -------------- China experts roundtable -------------- ¶5. (C) During a "readout roundtable" with Polcouns on 25 November, six China experts had varying opinions on the success of the visit, although all assessed the results as less than euphoric. Professor Manoranjan Mohanty, Co-Chairperson at the Institute of Chinese Studies, pointed out that China's attestation in the Joint Statement that, "it understands and supports India's aspirations to play a greater role in the United Nations," went no further than Chinese statements during the 2005 Prime Minister Wen Jiabao's visit. However, he believed that the visit was "a qualified success due to the breadth of the thirteen agreements," and remarked that the "quantum improvement in bilateral relations," as noted in the Joint Statement, was very significant. ¶6. (C) Mohanty's relatively upbeat views were met with tepid support at the table. Dr. Sreemati Chakrabarti, Professor and Head of the Department of East Asian Studies at the University of Delhi, affirmed that the steps taken toward building a better relationship were "incremental, but good." Dr. Raviprasad Narayanan, Research Fellow at the Institute for Defense Studies and Analyses, warned that it "was too early to determine the success of the visit," and lamented that the visit "lacked substance." Admitting to his status as "a young buck with no excess baggage from the 1962 conflict with China," he asserted that, although the biggest NEW DELHI 00008067 003.2 OF 005 threat from China was economic, one could not ignore the vast superiority of Chinese infrastructure along the disputed borders. He also cautioned that the GOI had no good intelligence mechanisms on its northern borders, claiming that the damming of the Sutlej river by the Chinese in Tibet (the Parechu River) in 2004 caught the GOI by total surprise. ¶7. (C) Mr. Vijay Kranti, a freelance journalist and editor of a recent biography of the Dalai Lama, had a much higher threat perception of China. He quashed Professor Mohanty's model of, "'the New Indian,' who is dealing with China as an equal for the first time," and declared that India was far behind China in border infrastructure and defense, and India's ability to project its military. Furthermore, Mr. Kranti believes that India may be subject to coercion on key issues, like the border dispute, if it allows economics to lull it to sleep while China "plays its age old balance of power game in the region." Even Mohanty admitted that, on the Brahmaputra River dispute, India was disappointed in its hopes for expanded engagement. "The visit was a disappointment for Northeast India," he acknowledged. ¶8. (C) In a November 22 meeting with Poloff, Dr. Swaran Singh, a noted Sinologist and Associate Professor at the School of International Studies, Jawaharlal Nehru University, echoed the more pessimistic think tank views noting that, "all of the thirteen agreements affected could have been done at the ministerial level. There was no need for the President to come." Referring to the simmering border issue, Sino-Pak relations, and a economics-dominated agenda, he fumed that, "the Chinese came here with nothing to offer us on our priority issues, and we are letting them get away with it." -- A largely negative media warns of an emerged China -- ¶9. (C) Although President Hu attempted to recoup good will lost in the spat over Arunachal Pradesh, insisting that "China and India should step up friendly consultations and work for an early settlement of the boundary issue," and that China was ready to, "actively seek a fair, just and mutually acceptable solution through friendly coordination on an equal footing," the media was not forgiving. An op-ed in the 23 November "Hindustan Times" (HT) summed up the media's general sentiment commenting that, "the problem seems to be a certain ambivalence in Beijing's stance towards New Delhi. On one hand, it seeks, as it does elsewhere in the world, opportunities in the trade and investment area. On the other hand, it seems to treat India as a strategic adversary that must be checked through the instrumentality of an unsettled border, or by encouraging Pakistan's hostility." ¶10. (C) News reports were not all doom and gloom, however, as a piece in the November 24 HT emphasized that officials, while "conceding that the relationship was a difficult one and would go nowhere if negatives were allowed to dominate, NEW DELHI 00008067 004.2 OF 005 there appeared to be a sense of quiet satisfaction, even accomplishment as Hu left for Islamabad, of a solid foundation having been laid." "Indian Express" journalist, ¶C. Raja Mohan, reminded his readership that Hu's visit to Pakistan, "with its focus on free trade and borders, highlights one of the consequences of the rise of China. If India does not get its neighborhood act together, China will emerge as the principle economic partner of most South Asian nations." -------------- It's more what he didn't say -------------- ¶11. (C) The Chinese Polcouns, Sun Weidong, claimed in a 28 November meeting with poloff that the visit was "very constructive." He referred to his notes constantly and noted that the visit was "overall, a good way to practice good neighborliness." He underlined that any disagreements "can be discussed, as long as there is a dialogue." Turning to the Pakistan leg of Hu's trip, Mr. Sun gushed about the "amazing reception that President Musharraf and Pakistan extended to President Hu." In contrast, his readout on the New Delhi trip was absent of any emotion whatsoever, mirroring the body language exhibited by Hu and Prime Minister Monmohan Singh during their discourses. -- A sigh of relief from India, as Hu departs Pakistan -- ¶12. (C) COMMENT: Although not a visit for the ages, if the thirteen economic and cultural agreements find traction in the India-China relationship and can create an ongoing high-level dialogue, the major barriers to a solid partnership (shaky borders, suspicion over the China-Pakistan and hegemonic aspirations) may be easier to overcome. Fallout from the visit would have been much worse if Hu's Islamabad/Lahore trip had led to a Chinese pledge for an increase in civilian nuclear cooperation with Pakistan. Much of India remains distrustful of China and, at best, sees it as an economic competitor in the region. ¶13. (C) Growing economic ties are clearly outpacing political relations between India and China. China is India,s second largest trading partner behind the US, with $20 billion in bilateral trade last year -- a goal the two countries had first set for 2008. Hu and Singh,s new goal of doubling trade to $40 billion by 2010 appears very achievable and puts China neck and neck with the US as India,s largest trading partner (although India-China trade is heavily skewed towards Indian raw materials going to China). Bilateral investment lags behind trade, not because of lack of interest by companies in both countries, but rather as a result of governmental hurdles. The newly signed bilateral investment treaty should help, although GOI concerns about Chinese state-owned companies, investment in "strategic" or "sensitive" sectors remain a brake on sectors like parts and telecoms. Another economic angle is emerging with big Indian firms, like Reliance Industries, seeking to import trained Chinese engineers in the face of certain labor NEW DELHI 00008067 005.2 OF 005 niche shortages. While government officials and opinion makers of these two emerging world leaders are focused on a legacy of mistrust and world order-changing roles in the UN and elsewhere, their economies, high speed growth may forge more cooperation than New Delhi and Beijing were prepared to concede. The jury is still out as to whether the bilateral relationship can overcome deep seated differences and suspicions and despite the lofty diplomatic declarations this visit was a reminder of how entrenched this sense of India-China distrust remains. END COMMENT MULFORD