The dramatic surge in bilateral trade is the biggest story on the India-China front in the past decade. But persistent imbalances are threatening to erode the consensus on the Indian side that the two countries can simply buy their way to a better relationship. What makes the visit this week of Wen Jiabao especially significant is the message the Chinese Premier sent out that he understood India's concerns on the question of market access and would try to find ways of resolving them. Other positives on the economic side to flow from Mr. Wen's visit were the announcements on a Strategic Economic Dialogue, the creation of a CEOs' forum, and the agreement between banking regulators, which will hopefully allow better synergy between the commercial operations and the financial requirements of Indian and Chinese companies doing business across the border. If China is able to unlock its markets for Indian goods and services, especially in the pharma and IT sectors, the new trade target of $100 billion can easily be achieved before 2015. If not, trade will continue to grow but the ballooning deficit will be like an albatross around the neck of the India-China partnership.
On the political front, the Chinese side failed to ‘unstaple' the issue of distinctive visas it grants to Indian citizens from Jammu and Kashmir who wish to travel to China. India has been complaining about this Chinese policy — which it regards as an affront to Indian sovereignty and territorial integrity — for more than a year, to no avail. “Our policy on Kashmir has not changed” is the only thing the Chinese side would say. This time, however, Premier Wen went a small step further and acknowledged this was an issue that needed resolution through “consultations.” Since China unilaterally adopted the stapled-visa policy, the ball is in its court. In consequence, the Indian side held back from the joint statement this time the standard formulations on Tibet and ‘One China.' It is not as if India's policy towards the territorial integrity of China has changed. But the point has been made, more or less in public, that respect for core national concerns must be mutual. This prickly issue apart, the Wen visit produced several new positives on the strategic front, most notably the decision to meet more often at the summit level and an agreement to work together against piracy in the Gulf of Aden. India and China should lose no time in implementing this aspect of the joint statement, and use it as a stepping stone for a full-fledged dialogue on the broader issue of maritime security and freedom of navigation. It is vital that the momentum achieved in the relationship between the two neighbours, the world's most talked-about rising powers, is sustained.