SHANGHAI ACADEMICS ON CHINA-INDIA RELATIONS

C O N F I D E N T I A L SECTION 01 OF 04 SHANGHAI 000789

SIPDIS

SIPDIS

STATE FOR EAP/CM AND INR
NSC FOR DENNIS WILDER

E.O. 12958: DECL: 12/13/2017
TAGS: PREL ETRD ENRG PARM CH IN RS
SUBJECT: SHANGHAI ACADEMICS ON CHINA-INDIA RELATIONS

CLASSIFIED BY: Christopher Beede, Political/Economic Section
Chief , U.S. Consulate , Shanghai .
REASON: 1.4 (b),(d)




1. (C) Summary: In a series of meetings in mid-November to
discuss China-India relations, Shanghai's leading South Asia
academic experts provided differing views on a variety of issues
including border disputes, United Nations Security Council
reform, energy competition, and regional dynamics. They painted
the overall relationship in a generally positive light, citing
the increasing number of high level bilateral visits and growing
trade ties as signs of a warming relationship. However, some
academics believe lingering border disputes and underlying
feeling of distrust will prevent the two sides from establishing
a solid strategic relationship in the near future. For now, the
two countries will continue to have a pragmatic relationship
based on their own economic and geopolitical interests. End
Summary.

The Third Rapprochement
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2. (C) Poloff met with Shanghai's leading South Asia academic
experts in mid-November to discuss the current state and future
outlook for China's relationship with India. Most of the
academics share the view that the current bilateral relationship
is good, highlighted by recent high level visits on both sides.
Indian Prime Minister Singh's upcoming visit to China in
December 2007 or January 2008 will add impetus to the growing
positive relationship. Zhao Gancheng, Director of the South
Asian Studies Department at the Shanghai Institute for
International Studies (SIIS),went so far as to say the two
countries have reached the "peak of their third rapprochement."


3. (C) Increasing trade links are also driving the two
countries closer together. Several academics cited statistics
showing current bilateral trade at US$25 billion, and they
projected China will displace the United States as India's
largest trading partner in the next few years. Although there
is a growing trade imbalance in favor of China, the academics
downplayed any trade tensions in the bilateral relationship. Du
Youkang, Director of the Center for South Asian Studies, Fudan
University, stated that some Indian companies still complain
about the trade imbalance and the Indian media occasionally warn
of the "second invasion by China." However, the Indian business
community is starting to view China as more of an opportunity
than a threat. Zhao sees the two economies as complementary,
with Chinese companies like ZTE and Huawei investing in India's
IT and communication sectors, and Indian companies investing in
auto parts and pharmaceutical companies in China.

This Land Is My Land
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4. (C) Despite growing economic ties, border disputes in Aksai
Chin (occupied by China) and Arunachal Pradesh (occupied by
India) remain serious obstacles to further improvement of
relations, according to the academics. Although the academics
agree that neither India nor China is satisfied with the status
quo and both sides will have to make concessions, they differ in
their assessment of where the process is headed. Wang Dehua,
Director of the Institute of South and Central Asia Studies,
Shanghai Center for International Studies, believes the process
is on the "fast track" to resolution following 11 rounds of
negotiations. However, other academics are less optimistic in
their outlook. Shen Dingli, Director of the Center for American
Studies, Fudan University, thinks that although there is a
general framework to settle the dispute, neither side can move
forward with any agreement because a) both sides are
"fundamentally distrustful of each other"; and b) domestic
politics will prevent either side from making any concessions.
He said the talks have reached an impasse, and there is no hope
of settling the issue in the near future. (Note: Although Shen

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is best known for his expertise on U.S.-China relations, he
claims that his personal passion is South Asia and Asian
regional security issues. End Note)


5. (C) Both Zhao and Du agree with Shen that domestic politics
play a major role in the dispute, and neither side would be able
to make concessions without angering their domestic audience.
Zhao explained that although China is not a democracy like
India, the Chinese Government is afraid of rousing a public that
is already sensitive about border issues. Despite these
domestic political hurdles, however, both Zhao and Du are
cautiously optimistic that the process will continue to move
forward step by step, and that both sides are sincere in their
effort to resolve the issue.

UN Security Council Reform: China Less Than Enthusiastic
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6. (C) The academics offered differing viewpoints on China's
stance towards United Nations Security Council (UNSC) reform,
namely, the accession of other countries to permanent membership
on the Security Council. Zhao and Wang believe China supports
UNSC reform. When asked whether China would back India's
accession to the UNSC, however, they did not provide a clear
answer, stating only that China would not oppose another
developing country playing a greater role in the UN. Shen, on
the other hand, dismisses the notion of China supporting any
UNSC reform. He asserts that UNSC reform would not be in
China's interest since it would dilute China's influence, and
China would never fully back India's or any other country's
accession to the Security Council.

Energy Competition: Exxon Sets the Price
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7. (C) Most of the academics do not see a growing rivalry
between China and India for energy resources. They stress the
cooperative side of the relationship, citing Iran as an example
where both countries have a common interest in preventing war.
However, Zhao qualifies this by saying that China and India will
cooperate where cooperation is possible (e.g., Nigeria) but will
compete where cooperation is not possible (e.g., Angola),
depending on whether host governments allow one or more oil
companies to do business in their country. He believes that
China and India could cooperate more to balance the "domination"
of the global energy market by US oil companies, stating
"ExxonMobil determines world oil prices."

Chinese Concerns about Regional Arms Race
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8. (C) The academics have differing views on the civilian
nuclear cooperative agreement between the United States and
India. Du said that it will not adversely affect China-India or
China-U.S. relations. He emphasized that both China and India
want good relations with the United States, and in the broader
picture, the nuclear deal is "not a big concern" for China.
However, Zhao and Wang expressed strong concerns that the
agreement will indirectly aid India's military nuclear regime
and fuel a regional nuclear arms race between India and
Pakistan. In reference to the Nuclear Nonproliferation Treaty
(NPT),Zhao pointedly accuses the United States of "always being
the first to break international rules that they themselves
establish." His biggest point of contention is that the United
States did not consult with any major powers (i.e. China) before
the deal was forged. Zhao perceives the nuclear agreement as
proof of U.S. unilateralist behavior. Shen sees the agreement
in the context of broader regional dynamics. According to him,
China views the nuclear agreement as part of U.S. policy to
nurture a democratic regional power that can hold China in
check. Although China may not like the deal, there is nothing
it can do to prevent the deal from moving forward.

Neither Friend Nor Foe
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9. (C) Zhao believes that China and India have a common
interest in countering unilateral action by any country in the
international arena. For example, both countries oppose "U.S.
domination" of the IMF, WTO, and other international
organizations. He maintains that there is no competition for
military or regional supremacy between China and India, and that
both should work together to forge a better counterweight to
"U.S. hegemony" in Asia. Du agrees that there is no military
rivalry between China and India. Although there are some
elements in the Indian military who call China a growing threat,
this may be in order to gain more funding. Du says most of the
Indian military leaders he spoke with believe the Chinese
military's main focus is still Taiwan and not India. Shen,
however, does not see the bilateral relationship in such a
benign light. According to Shen, South Asia is still dominated
by India, but some of India's neighbors, like Bangladesh and
Myanmar, do not have very good relations with India. Although
China will not outright announce a strategic partnership with
India's neighbors, nor will it instigate any regional tension,
it will continue to tap some of the anti-India feelings among
India's neighbors to its advantage. Unlike Pakistan, which is
an imminent concern, China is more of a long term strategic
concern for India.

China-India-Russia Trilateral Relations
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10. (C) The academics are in agreement that the October 2007
trilateral meeting in Harbin, China between the foreign
ministers of China, India, and Russia was mostly talk and
contained little substance. Shen noted how the Chinese
Government advised the Chinese press not to characterize the
trilateral relationship as a strategic alliance in order to
avoid antagonizing the United States. Although China's
relationship with Russia has improved in recent years, there is
still a deep level of distrust on both sides. Regarding India
and Russia, Shen believes the relationship is still good but not
nearly as good as it was during the Cold War. The main reason
for this, according to Shen, is that India is now trying to
diversify its international ties, forging better relations with
a number of countries including the United States. None of the
academics view the Shanghai Cooperation Organization (SCO),in
which China and Russia are members, as a particularly forceful
regional entity. Zhao and Du think security was its main
concern at the start, but now the organization is transforming
into an economic cooperative body and may be losing its focus.
Although India wants to play a more active role in the SCO,
citing "historical ties" with Central Asian states, Shen stated
this is unlikely to happen since if China accommodates India, it
will also have to accommodate Pakistan.

Ignorance Breeds Distrust
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11. (C) All the academics believe some of the distrust and
misunderstanding between China and India stem from the people's
lack of knowledge of each other. They noted there are very few
India experts in China. Zhao simply stated "India is not a hot
subject for Chinese students." But he went on to say this is a
two way street, and the lack of understanding in India also
contributes to negative reporting on China by the Indian media.
Du and Shen cited figures for the movement of people between the
two countries as an area of concern. According to them,
500,000-600,000 Indians came to China last year, whereas only
50,000 Chinese went to India. Many of these were business
travelers, and Du and Shen criticized what they perceive as the
Indian Government's discrimination against Chinese academics and
students. They both recalled how several of their university
colleagues and students were refused Indian visas in recent
years. They speculated that the Indian Government has some
"security concerns" about this category of Chinese travelers.
The academics hope that more scholarly exchanges in the future
would help alleviate some of the misunderstandings between the
two countries.

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12. (C) Shen sees some positive signs in this regard, saying
how the number of exchanges is gradually increasing, and the
anti-Chinese rhetoric in India is also on the decline. He also
noted how the Chinese Government is increasing its funding of
several South Asia study centers throughout China.
Specifically, he mentioned new research institutes in Sichuan
and Yunnan Provinces, Shenzhen, and the Shanghai Institute for
International Studies (SIIS) and Chinese Academy of Social
Sciences (CASS) as recipients of additional government funding
for their South Asia programs.

Comment
--------------


13. (C) Although most of the academics see the China-India
relationship heading in a generally positive direction, mostly
in the economic sphere, they also acknowledge that it is a
complex relationship based on historically deep-rooted distrust
and border issues that will not be easily resolved. For now, it
appears to these Shanghai-based observers of South Asia that
both China and India will allow some of these salient issues to
be subordinated to economic interests and will continue to adopt
a pragmatic, step by step approach towards fostering better
relations.
JARRETT