India, China warm up to each other

"We have accomplished a major feat," Chinese Prime Minister Wen Jiabao declared on Monday night at a banquet held in honour of Prime Minster Atal Bihari Vajpayee. Just before the banquet, India and China had signed two major documents, the first a joint declaration by the two Prime Ministers and the second, even more significantly, an agreement on cross-border trade.

Vajpayee is due to meet Chinese President Hu Jintao on Tuesday afternoon, so neither the Indian side nor the Chinese authorities are willing to release the draft of either document till that meeting has been concluded. Nor are diplomats permitted to talk about them.

But the mood of relaxed confidence and the bonhomie at the banquet told their own story. The cross-border trade agreement is considered an important movement forward because it is believed to include a tacit admission by the Chinese of Sikkim as a part of India.

At present, China is the only country in the world that still refuses to recognise Sikkim's accession to India.

Indian diplomats had believed that China would link the Sikkim accession to the border dispute, asking for concessions on Tawang in Arunachal Pradesh. In fact, the Chinese made no attempt to link Sikkim to the complex border issue.

A story by the official Chinese news agency had suggested that India had made concessions on Tibet but that now seems to have been misleading. The document signed on Monday is believed to only recognise the People's Republic of China's claim to the “autonomous Tibet region”. The phraseology makes it clear that all of Tibet is excluded from the scope of the agreement and the reference to the People's Republic clarifies that no historical claim has been recognised.

Monday's developments suggest that the Vajpayee government's China policy is working. The regime had concentrated on sidelining the contentious border and Pakistan issues till a framework of constructive trust was established. The Chinese willingness to make concessions on the Sikkim issue suggests that Beijing is responding positively to this approach.

Even the joint declaration is believed to be a small victory for the Indian side, with the Chinese finally agreeing to a nuanced document of the sort that Delhi had always wanted.

BEIJING GESTURES CLEAR THE AIR

Sikkim

• Border trade to be conducted through Sikkim

Implication: Tacit admission of Sikkim’s accession to India

Border dispute

• Issue not linked to Sikkim as feared earlier

Implication: China accepts good ties override specific issues

Economic ties

• China unveils $500 m corpus for investment in India

Implication: Deepening Chinese involvement in Indian industry