International community is watching closely as the two most populous countries and fastest growing economies in the world expand their cooperation. For the first time in eight years, China and India attended a meeting last month to deliberate terms of the new economic agreement aimed to dampen the mistrust between the states. China’s generous investment of billions of dollars in India’s infrastructure leaves the sudden interest in India questionable and the hidden agenda of the most powerful economy in the world remains uncovered, especially in the light of primal disputes and mistrust.

The Chinese President Xi Jinping (his wife: far left) and Indian Prime Minister Narendra Modi during their bilateral agreement meeting in September. Source: Flickr CC.
The Chinese President Xi Jinping (his wife: far left) and Indian Prime Minister Narendra Modi during their bilateral agreement meeting in September. Source: Narendra Modi, Flickr CC.

Historically, the relationship between China and India has been somewhat complicated. The major issue concerns the yet ongoing border dispute, unresolved since a short conflict in 1962, of an area located near the Himalayas, which by Chinese is referred to as South Tibet and by Indians as Arunashal Pradesh. This border dispute creates tension between the two populations and generates a mistrust that limits open-mindedness.

The two countries’ mistrust is not, however, reflected in their recent scope of economic cooperation. The bilateral trade experienced initially slow development, starting with an annual overturn of $0.2 billion in the beginning of the 1990’s and growing only to $2.9 billion at the turn of the millennium. The trade since is, nonetheless, projected to hit an aggregate $100 billion mark by 2015. The trade deficit for India is estimated to be $30 billion, which adds up to the already existent mistrust of China. The, although uneven, trade is a source of major concern on the West front, where the American hegemony is threatened to be thrown out of balance.

China town in preperation for the Chinese New Year in Calcotta, India. Source Indrajit Das, Wikimedia Commons.
China town in preperation for the Chinese New Year in Calcotta, India. Source: Indrajit Das, Wikimedia Commons.

The reasons to these concerns are strictly tied to the newly negotiated criterion at the meeting between the Indian Prime Minster Narendra Modi and Chinese President Xi Jinping on the 18th of September this year, where the two parties tried to overlook the deep-rooted mistrust and border dispute for the better good. The Chinese generosity in form of a $25 billion investment in a new railway system in India and the newly established industrial parks in Gujarat and Maharashtra are just a few of the commitments, which pose the rationalistic question of what the mutual benefits to this promise are.

Firstly, what could be seen to China’s advantage is the Indian membership, which was finally disclosed and opened up for a debate during the September meeting, in Shanghai Cooperation Organization, SCO. With its headquarters in Beijing and established in 2001, the organization was speculatively supposed to balance out the NATO and American influence over the Asian continent. Despite these accusations never finding empirical ground, it has not been disproven that the purpose as such is to regain control over security and trade questions in light of WTO and the UN. Besides the geopolitical gain of Indian membership, its presence would boost the organization’s ethos and enhance its credibility, not to mention the added finances to the core missions. Furthermore, it is highly advantageous to broaden India’s cooperation within SCO for added influence over its foreign policy outcomes and trade agreements with other Asian states. Considering the abovementioned aspects, India’s membership is clearly a gain for broadening China’s authority and the proposal for membership came conveniently on par with the new investments.

Yet another aspect appears to be blooming out in the wake of the Jinping’s speech in 2013 about the concept of Maritime Silk Road. The evidence reveals heavy investments in port cities, such as Colombo in Sri Lanka and the increasing economic cooperation with China. The anticipated $20 billion project cost over the next 15 years is supposedly giving rise to Colombo Port City – the new rival to the already run-down competitors such as Dubai and Singapore. The discussion about more investments in port cities is currently ongoing with Maldives. Japan, among others, views it as worrisome due to concerns of China’s undefeatable dominance and influence over the Indian Ocean. Zhou Bo, an honorary fellow with China’s Academy of Military Science, is less concerned claiming this stunt is only organized because it “will help to mitigate security concerns.”

Whatever the reason behind the grand Maritime Silk Road concept, the underlying fact remains that the Chinese investments in port cities may eventually be spreading to India, as the cooperation between those two countries tightens. The Indian SCO membership only adds to the potential web of influence China might be exercising. The agreements in the past months did not, and most likely were not intended to, solve the disputes or rooted mistrust between the two countries. The agreements did, however, open the door for the future negotiations evolving around Maritime Silk Road, and if it is sufficiently supported and funded, behind the curtains of the “peaceful diplomacy”, China might just be acquiring a status as an aggressive regional hegemony.

MAJA WISENBERGER