NEW DELHI // Lingering tensions over a recent three-week border stand-off will cast a shadow over the Chinese prime minister's visit to New Delhi on Sunday.
Li Keqiang, who assumed office in March, chose India for his first official foreign trip. He was expected to sign a number of bilateral agreements, including a crucial border defence cooperation deal. The trip comes after last month's 21-day stand-off on the Line of Actual Control, which demarcates the border between India-controlled Kashmir and China's Xinjiang province.
The stand-off began in mid-April, when a platoon of 50 Chinese troops was discovered to have camped 19km across the Line of Actual Control into India. The Indian military responded by setting up a new camp of its own less than half a kilometre away.
China denied that its troops had crossed the border, even as India pressed for the area to be vacated. A compromise was finally reached on May 5, in which the Chinese platoon withdrew from the area and India promised to dismantle some of its bunkers and observation posts on the border.
When India's foreign minister, Salman Khurshid, was in Beijing on May 10, Mr Li said that he would "like to negotiate with India to settle border issues". On the same day, the People's Daily, the Chinese Communist Party's official newspaper, wrote in an editorial that Mr Li ought to "separate the boundary issue from overall China-India relations".
The border defence agreement was proposed by China during Mr Kurshid's visit. Although no details have been released, China's vice foreign minister, Song Tao, said on Thursday that it would probably require several "friendly consultations" to "ensure peace and tranquillity on border regions".
The agreement, however, would not make any headway towards ending border disputes, said Srinath Raghavan, a New Delhi-based historian and defence analyst who is a senior fellow at the Centre for Policy Research think tank.
"Earlier agreements have been about ensuring peace on the border, and this will be a little more incremental" towards establishing a lasting peace, Mr Raghavan said yesterday.
The border dispute could have been a signal of China's intent to settle territorial issues.
"It could be that China has genuinely been thinking this for some time, and the pitching of tents on the Indian side was a way to convince India about the seriousness of the border issues," he said. "Or it could be that they were slightly taken aback by the speed of the Indian response and are therefore rethinking the wisdom of allowing these issues to be sidelined for so long."
The border dispute has not affected trade between the economic powerhouses. Mr Li is arriving with a large business delegation, members of which will attend the first China-India CEOs forum and a business cooperation summit.
China is now India's second-biggest trading partner, behind the European Union. Bilateral trade has increased sharply from US$5 billion (Dh18.37bn) in 2002 to $66bn last year, according to figures released by China's general administration of customs. The two countries are targeting a trade volume of $100bn by 2015.
India has been concerned about imbalance in the trade figures, however. The trade deficit stood last year at nearly $29bn in China's favour, and both countries have resolved to redress this imbalance.
Mr Song said on Thursday that his country would "facilitate Indian companies' efforts to explore the China market" and that both nations would work to "better promote two-way investment, so that we can gradually resolve the issue of the trade deficit".
The imbalance came about partly because Indian products were, in terms of prices, less competitive than Chinese products, but partly also because of China's protectionism around its economy, said SK Mohanty, a New Delhi-based economist specialising in India-China relations who works for a research institute under India's ministry of external affairs.
"For example, under the World Trade Organisation regime, India can export 22 classes of agricultural products to China, but at the moment only three are exported," Mr Mohanty said. "China blocks the remaining products citing various conditions, even though India insists that these conditions don't apply."
Gradually, however, Chinese trade officials are realising that the imbalance is hampering the overall growth of bilateral trade.
"We were on a delegation to China a month ago, and from our discussions with officials there, it did seem as if they were genuinely worried," Mr Mohanty said.
"How serious they are about what they say remains to be seen. But I think we should get a good idea of that on Li Keqiang's visit this week."
Mr Li was also scheduled to visit Mumbai before flying to Pakistan on Tuesday.