Correct option 3. Both I and II follow. The statement talks about a state of conflict between India and China arising because of cross border tension. India should try to cut trade ties with China unless the tension is resolved, also China should be excluded from infrastructural pacts for security reasons. Therefore, course of action I follows. India should get into no form of settlement unless the original state of affairs during the month of May is restored. Therefore, course of action II follows. Hence,option 3 is correct.