Since formally establishing diplomatic relations with the People’s Republic of China in 1950, Indo-China relations have been rather volatile, lacking in confidence, with long-standing and unresolved territorial issues proving to be the major sticking point between the neighbours. These issues need immediate redressal for any meaningful progress between two of Asia’s biggest economies.

1) Border disputes

• Probably the biggest sticking point in Sino-Indian relations, border disputes between the two countries have existed since many years, and remain unresolved. While several territorial land pockets (14 divisions) along the 3488-km-long border, (Line of Actual Control) have come under dispute, the two main unresolved issues remain Aksai Chin and Arunachal Pradesh. In 1962, the two countries fought a brief war in Aksai Chin and Arunachal Pradesh, in which the Chinese People’s Liberation Army handed the Indian Army a comprehensive defeat.
• Though Aksai Chin is administered by China, India’s official position on the issue is that, by virtue of it being a part of Jammu and Kashmir (Ladakh), the region remains an integral part of India. For China, which claims Aksai Chin as part of its Xinjiang province, the region is of utmost strategic importance as it connects Xinjiang with Tibet.
• The other border dispute between the two countries involves the north-east Indian state of Arunachal Pradesh. While the Indian side claims Arunachal Pradesh to territorially be an integral part of India, China refers to it as South Tibet, mainly because of its Tibetan Buddhist affiliations. Chinese maps often include a major part of Arunachal Pradesh (around 90,000 sq. km) as part of their country, which China primarily uses to provoke India.

2) Border incursions

• An immediate fallout of the several unresolved territorial claims by both nations, border incursions/intrusions have been a major stumbling block to improving relations between India and China. Both countries have been strengthening their military presence along the Line of Actual Control (LAC). While China has deployed close to 300,000 troops (13 full ‘Border Defence Regiments’) India has deployed around 120,000 troops in the Eastern Sector.
• In 2009, China began the practice of issuing stapled visas to residents of Jammu and Kashmir and Arunachal Pradesh, provoking a strong protest from India. It rejected this practice saying these acts by China amounted to questioning India’s sovereignty and territorial integrity. In 2011, China stopped issuing such visas for people from Jammu and Kashmir.
• However, in the recent past, several sportspersons from Arunachal Pradesh, including weightlifters and archers, have been issued stapled visas by the Chinese embassy, causing further annoyance to India.

4) Tibet

• At the very heart of India’s relations with China is the unresolved issue of Tibet. In 1950, Chinese troops invaded Tibet to reclaim and re-assert its sovereignty (Tibet declared independence from China in 1913) over the region, which was confirmed after both parties signed the Seventeen Point Agreement. In 1950, following an uprising in Tibet, the 14th Dalai Lama fled to India, with many of his followers joining him in exile, where he established the Central Tibetan Administration (commonly known as the Tibetan government-in-exile). When the uprising took place, according to a 1959 report in the Xinxua, Chairman Mao Zedong accused India of “aiding the rebels, and that Nehru and the bourgeoisie in India had sought to maintain Tibet as a buffer zone and restore its semi-independent status." In 2003, when then Indian Prime Minister Atal Bihari Vajpayee visited Beijing, India recognized the Tibet Autonomous Region as an “integral" part of the People’s Republic of China.
• However, while India’s official position on the Dalai Lama is that it considers him a spiritual leader and an honoured guest, China on the other hand said, “it opposes any country that provides a platform for his (the Dalai Lama’s) anti-China activities in any form."

5) String of pearls

• One of India’s growing concerns in the last decade or so is China’s ever-expanding sphere of geopolitical influence in the Indian Ocean. Dubbed as “string of pearls" in wonk-speak, it involves the development of commercial ports in various countries as part of its new “Silk Route". The route, which China claims as an important trade corridor, extends from its naval base in Hainan Island (South China Sea) to Bagamayo in Tanzania, Africa, with several of the ports encircling mainland India. These include Hambantota (Sri Lanka), Gwadar (Pakistan), Chittagong (Bangladesh) and Marao Atoll (Maldives). Also, besides India, China is the only other country to have a fully functional embassy in Male.
• Officially, India does not see these developments as “competition" between itself and China. China denies that these ports are to be used as naval bases to threaten its neighbour.
• The other areas where India and China are engaged in a few bouts of shadow boxing involve increased trade and development projects in Africa and Latin America.

6) Water dispute

• While China is already involved in several water-sharing disputes with countries like Laos, Cambodia, Thailand and Vietnam over the Mekong River, its plans to build several dams on the upper reaches of the Brahmaputra (known as Tsangpo in China) hasn’t gone down well with New Delhi. The Brahmaputra, which originates as Tsangpo in Tibet, is one of the major water resources in India’s north-east, especially as a source for irrigation and industry.
• China has a unique, exclusivist policy when it comes to sharing natural resources. It follows a doctrine that believes in exclusive use of resources that originate from its soil. India, in the meanwhile, is looking to build 25 hydropower plants in Arunachal Pradesh before China completes its project. India is also concerned about “a decrease in the flow of the river water" and “the destruction of the Himalayan ecosystem."

7) Trade imbalance

• Trade relations between India and China formally resumed in 1978. Six years later, the two countries signed the most favoured nation (MFN) agreement. India’s trade with China began rather modestly, as low as $2.92 billion in 2000. Eleven years later, it rose to a phenomenal all-time high of $73.9 billion. In 2012, decreasing Indian exports over the previous 12 months meant, it fell to $66.57 billion.
• While China is India’s largest trade partner today, concerns about trade imbalance between the two countries remain, with the imbalance skewed in China’s favour. During 2013-14, the trade deficit between the two countries was at $36.22 billion.
• Decreasing Indian exports aside, strong Chinese regulatory systems have put off exports from India, especially from sectors like information technology (IT), meat and pharmaceuticals, where India is believed to have the upper hand.
• India is an exporter of raw materials to China, with India importing finished goods from China that have virtually invaded the markets in various sectors like toys, consumer electronics and even areas like firecrackers, thereby affecting India’s own manufacturing sector. Various other goods like glasses, ceramics, bathroom fittings among many others are also getting easier to import from China.
• Traders prefer buying finished goods from China, as they’re better in quality and come cheap, compared to the rising production costs and other related taxes and duties back home, and offer them better margins. While some traders and small manufacturers have adapted themselves to an ever-expanding Chinese import situation, it has also put some Indian industries on notice, while some have decided to shut shop.