Map showing disputed territories of India Border disputes resulted in a short border war between the People's Republic of China and India on 20 October It also occupied strategic points in the Aksai Chin and Demchok regions of Ladakhbefore declaring a unilateral cease-fire on 21 November.
The picture of a benign South-South alliance that challenges the neoliberal global North fails to understand the way in which all economies have an impetus to accumulate and are linked by and locked into a process of competitive accumulation.
When competition is placed at the centre of analysis a more complex picture of South-South relations emerges. In Brazil, for example, while exports to China have helped its economy to negotiate the economic crisis relatively unscathed so far, the 40 percent appreciation of the Brazilian real against the dollar in the last two years has made domestically produced goods uncompetitive.
A further problem for the Global South is that foreign investment has been diverted from other industrialising economies to China. It is locked into similar competitive interdependencies with other major capitalist economies and their ruling classes, and with the US in particular.
However, more importantly, they are part of a set of deepening interdependencies between China and the core capitalist economies. This was vividly illustrated at the end of October when China exhorted the EU to solve its debt crisis and when the EU in turn went running to China to ask for a contribution towards its bail-out fund for the eurozone.
The dollar-renminbi exchange rate has produced significant skirmishes between the ruling classes of the US and China as they strive for competitive advantage.
Washington has complained that this gives Chinese firms an unfair advantage and demanded that the renminbi is allowed to float freely on the exchange markets, which would lead to a substantial revaluation of the Chinese currency. In July the Chinese government announced that the renminbi would be allowed to appreciate somewhat against the dollar.
In the wake of the crisis the exchange rate was frozen between andbut appreciation has again been allowed since early This spilled over into heightened tensions in October when the US Senate passed a bill that would impose tariffs on imports from countries that undervalued their currencies.
But the American deficit cannot expand indefinitely. July saw a poisonous stand-off between two sections of the US ruling class over its ballooning debt. As the global economy continues to falter, tensions between the US and China have intensified.
These are likely to deepen and multiply as the two powers grapple with the contradictions of their strategies of accumulation. And, as history shows, economic competition dovetails with political and military rivalry. But the geographical and social space within which states can claim legitimate decision-making force is limited for, as this journal has long highlighted, states operate within a system of many states.
States do not, however, meekly accept the national limits of their power but seek to shape the external environment, within the limits of their own resources, by influencing international processes and the domestic politics of other states.
It has settled a dozen border disputes with its neighbours over the last decade, and has improved relations with Taiwan since the victory of Ma Ying-jeou from its traditional enemy the Kuomintang in the March presidential election. On its northern and western borders China was a co-founder of the Shanghai Cooperation Organisation, which also includes Russia and the Central Asian republics—Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan.
Further afield China has assumed a growing role in UN peacekeeping and humanitarian missions and now makes the largest peacekeeping contribution of the five permanent members of the UN Security Council.
But these agreements are only one side of their relations and China and India increasingly appear to be locked into a dynamic of rival alliance construction.
As a result, India has undertaken a major revision of its foreign and strategic policy.James Poterba, president James Poterba is President of the National Bureau of Economic Research. He is also the Mitsui Professor of Economics at M.I.T.
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). James Poterba, president James Poterba is President of the National Bureau of Economic Research. He is also the Mitsui Professor of Economics at M.I.T.
China–India relations, also called Sino-Indian relations or Indo-Chinese relations, refers to the bilateral relationship between the People's Republic of China (PRC) and the Republic of timberdesignmag.comgh the relationship has been friendly, there are border disputes and an economic competition between the two countries that have at times led to strained relations.