India, China set up hotline to ease border dispute

Relations between India and China – the world's two most populous nations – were improved, say analysts, by December's climate conference in Copenhagen, where the biggest and fourth-biggest emitters pulled together to work out a deal, which many developed countries criticized as inadequate.

Ms. Acharya says the nations’ handling of last year’s border flare-up also had a calming effect. “Despite the media uproar, there was a very mature and calm handling of that phase, with statement from both sides stressing the importance of keeping things on an even keel.”

A meeting between the foreign ministers of India, China, and Russia in Bangalore in October – in which the three stressed that the international community must remain committed to stability in Afghanistan – also encouraged a constructive element to relations, she says.

$60 billion in trade

Indeed, both India and China have a lot to gain from increased cooperation, particularly in cross-border trade.

Trade between the Asian giants, which are both making a speedy recovery from the global financial crisis, is expected to top $60 billion this year, up from $260 million in 1990.

This is heavily skewed in China’s favor, to the tune of some $16 billion, and both countries have acknowledged the need to even out trade flows with some sort of bilateral agreement.

In particular, India, a country now awash with Chinese goods, wants China to open up its markets to Indian products and services in sectors from information technology to culture.

“In the past few years Indians have been learning to cope and deal with China’s “assertiveness” and its unfriendly face,” wrote Sanjaya Baru, editor of the Business Standard newspaper, in a recent editorial.

“In the next few years they may well find dealing with China’s friendly face equally challenging.”

Mistrust remains

Besides the Arunachal issue, territorial anxieties are also aroused over China’s involvement in the disputed Himalayan region of Kashmir – which is divided between India and Pakistan but claimed in its entirety by both – and its alliance with Pakistan.

India is also suspicious of China’s growing military clout. These suspicions are unlikely to be allayed by the news about cyberspying aired on Tuesday. The report, by researchers from the University of Toronto, said the spies, who used online services including Google and Twitter to hack into computers, may have passed information on to branches of the Chinese government. They said they found no hard evidence to make this link.

Another bone of contention is China’s refusal to stamp passports from Indian-controlled Kashmir. In recent years, Kashmiri visitors to China have received a separate visa page stapled into their passport. This is effectively useless for direct India-China travel because authorities at Indian airports do not recognize visas without stamps.

In late March, a China-bound professor from Kashmir University was surprised to find his visa had been stamped. But it remains unclear whether this represented a change in policy or a mistake.

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