Border affairs mechanism to be set up; high-level dialogue to redress investment grievances

India and China on Wednesday agreed to work towards removing all major irritants impacting bilateral relationship including the border issue and trade imbalance. At their first meeting this year, both Prime Minister Manmohan Singh and Chinese President Hu Jintao agreed to set up a mechanism on coordination and consultation on border affairs, resume senior-level defence exchanges, initiate a high-level economic dialogue for focussed redress of investment and market access grievances and step up high-level contacts.

On the sidelines, officials came away with the impression that China is agreeable to resolving the issue of issuing stapled visas to Indians domiciled in Jammu and Kashmir.

Peace, stability

With frequent reports of transgression across the Line of Actual Control (LAC), both leaders expect the consultation and coordination mechanism to achieve consensus and better maintain peace and stability in the border regions until the boundary issue is resolved. This proposal was mooted by Chinese Premier Wen Jiabao during his India visit in December last. Dr. Singh and Mr. Hu also instructed their Special Representatives to continue working towards settlement of the boundary issue.

The two countries decided to end the pause in high-level defence exchanges with a multi-command Indian Army delegation scheduled to visit China later this year. India halted high-level defence exchanges after China denied visa to an Indian Army commander whose area of responsibility included Jammu and Kashmir. “They also discussed further defence exchanges and visits,” National Security Adviser Shivshankar Menon told journalists after Dr. Singh's two major bilaterals of the day — with Mr. Hu and Russian President Dmitry Medvedev. .

Essentially, Dr. Singh and Mr. Hu dwelt on four major bilateral issues, besides briefly discussing the BRICS summit beginning on Thursday and the situation in North Africa and West Asia, the principal source of energy supply to both countries.

The 50-minute meeting saw the two leaders resolving to hold the first meeting of a high-level strategic and economic dialogue mechanism. This will address reservations expressed by either side in the fields of infrastructure, Information and Technology, pharmaceuticals, investments, project contracting and banking “to achieve a win-win result,” as Mr. Hu put it. Mr. Menon expected this forum, to be headed by Planning Commission Deputy Chairman Montek Singh Ahluwalia, from the Indian side, to address the slow place of access to Indian IT, pharma and agro-products companies.

China is India's largest trade partner and bilateral trade crossed $61.8 billion last year. Both sides are well on the way to achieving the target of $100 billion by 2015. But the huge imbalance in trade is of concern to India.

It was agreed to step up the frequency of high-level exchanges with Vice- President Hamid Ansari likely to be the next major Indian leader visiting China. “We have the understanding to maintain the momentum not just this year but in the subsequent years [also]. We will do two-three very high-level visits this year,” said Mr. Menon.

The two countries also formally announced the start of the “Year of China-India Exchange.” China will invite 500 young Indians from all walks of life and support teaching of Chinese in Indian middle and high schools.

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