Parsing the Xi Jinping Visit: Economics as the ‘Base’ of the Sino-Indian Relations

P.K.Anand is associated with Institute of Chinese Studies, Delhi. He can be contacted at anand.p.krishnan[at]

P K Anand
P K Anand

The three-day state visit of the Chinese President Xi Jinping was viewed with great expectations and therefore, received great fanfare and media glare. While the NDA government under Modi left no stone unturned to give the visit some grandstanding and a personal touch thereby altering protocols, Xi also sought to use the occasion to amplify the Chinese charm offensive. While both Modi and Xi had met on the sidelines of the BRICS Summit last July in Brazil, this state visit was marking the beginning of a new phase of Sino-Indian relations since the change of government in Delhi. Therefore, setting of a template to nurture the relations and allowing it to further grow is a serious point that both sides were intending to drive home through their interactions.

Setting aside protocols, the beginning of the visit from Gujarat can also be seen as not only providing opportunity for personal bonding and informality that would work to ease out the tough institutionalized negotiations, but also add the significance of sub-national/provincial dimension in foreign policy. Also, the fact that Narendra Modi being the chief minister of Gujarat before rising to the national level leadership and that Xi Jinping having earlier cut his teeth as the Governor of Fujian province and as Party Secretary of Zhejiang province as well as of Shanghai before elevation as the supreme leader also serves to underline the provincial component. Further, Gujarat is a preferred destination for Chinese and Japanese investments, thereby getting more economic and business focus. In fact, there have also been comparisons about Gujarat with Guangdong, which is one of China’s most prosperous and high-developed provinces. Among the three agreements signed in Gujarat during Xi’s visit, two were specifically between Gujarat and Guangdong in terms of having greater linkages, thus providing enough hints of future inter-provincial ties. Among the two industrial parks to be set up with Chinese help, one on development of Power resources is intended in Vadodara.  

Economics as the ‘base’ of the Relations

Apart from being two old civilizations and having historical links, China and India are today viewed as two rising powers with the most people living within their borders. While the over five-decade long border dispute still rankles leading to constant transgressions due to differing perceptions, the fact that there has been no skirmish till date is of credit to the institutionalized mechanisms that have been put in place and the maturity shown by both sides. The decisive understanding among the leadership of both the countries to not hold bilateral relations hostage to the unresolved border also emanates from the growing significance of economics. While the Sino-Indian relations still has political underpinnings at the surface level, the foundations today, are largely economic. In this regard, the Modi government has chosen to follow-up on the Manmohan Singh government’s policies. As the visit by Xi comes on heels of Modi’s Japan visit, where he was able to get a commitment of $35 billion for the next five years, the impression was that the Chinese, given their strenuous efforts to establish links with the new government in Delhi along with the traditional Sino-Japanese rivalry, since the declaration of Lok Sabha election results, would offer substantially more. A figure of $100 billion was doing rounds, with $50 billion each for Railway modernization and development of ports, infrastructure and river linking. However, against these high sounding expectations, the ensuing agreements have only reflected an investment by the Chinese of $20 billion in the next five years. The exact operative part of these investments is yet to be clarified. The more than three-decades of reforms and modernization, while raising China to an industrial and manufacturing power house, have over the years led to overheating of the economy, plateauing of growth and labour conflicts. This in turn has engendered the need to expand the manufacturing centres outside China and search for new markets. Given the scale and size of the Indian market, the Chinese are only eager to spread and space out their investments in various sectors. The Indian side on the other hand is actively seeking the Chinese expertise and skills in infrastructural development and transportation. This is best reflected in the two agreements on the modernization of the Railway sector in India, wherein the Modi government seeks active Chinese help in greater investment and modernization of the sector through re-development of tracks, feasibility of High-Speed Trains, training of personnel and specific projects for cooperation. It has be noted that even though the investment levels under the MoUs may be on the lower side, the agreements between the Corporate sector of both the countries has been glossed over. Various Indian firms like Indigo Airlines and Reliance have signed partnership and cooperation agreements with Chinese firms like Huawei and Industrial and Commercial Bank of China, which amount to $3.4 billion. However, one also has to be equally cautious in presenting a rosier picture, as the Indian concerns of trade imbalance amounting to $40 billion with China continues to impede asymmetry in trade relations. While the bilateral talks have again stressed the need for Indian software services and agrarian as well as pharmaceutical products to gain market access in China, there are no concrete road maps or clarity emerging on the possible measures to overcome the existing hurdles.

Photo: MIB/twitter
Photo: MIB/twitter

The increasing eagerness and tenacity displayed by both China and Japan in warming up to the new dispensation in India and the equally positive vibes adopted by the Modi government has to be properly contextualized and rationalized. Given the traditional Sino-Japanese rivalry that is driven down from history, both nations would continue their efforts to court India. However, rather than entering into any kind of bandwagoning with either side, it is in India’s interests to smartly play around by maintaining its neutrality and gain the benefits of adopting such a position from both sides.  

Vital Importance of People-to-People Interactions

Apart from the economic angle, the MoUs also feature areas like cooperation in Outer Space, Pharmaceutical drugs, interactions between cultural-heritage institutions, literature and religious tourism. The last point specifically pertains to the opening of an alternate and better navigable route for Kailash Mansarovar Yatra through Sikkim, in addition to the more arduous traditional route in Uttarakhand. Further, China has come forward to train 1500 language teachers, a step that is highly required, given the need to better learn and understand Mandarin. The Modi government has also built on some steps of the Manmohan Sigh government, in terms of mooting partnerships between cities of both countries to foster linkages and people-to-people contacts. Therefore, from Delhi-Beijing, Kolkata-Kunming and Bengaluru-Chengdu, two more agreements have been signed to establish similar linkages between Mumbai-Shanghai and Ahmedabad-Guangzhou. Perhaps, learning from the urban development strategies of Chinese cities could be added to these envisioned people-based connections, so as to discern policies for inclusive development that could be beneficial mutually. The cultural angle and people-to-people dimension of the Sino-Indian relations is inseparable from the political, economic and security angles. Given the geographical proximity and aligning borders, China and India need to have deeper and wider interactions at various levels to mitigate the trust deficit, apprehensions and stereotypes induced by the baggage of history. Unless people on both sides of the Himalayan gap understand each other better, the narrative of possible confrontation and heightened competition for global trade routes and economic resources will prevail. Equally, both sides need to track areas of possible convergence and learn from each other, in order to further grow and develop, even on individual terms.

The Aspect of Connectivity: ‘Silk Routes’ and ‘Spice Route’

Connectivity and Shared Mutual Development of the Neighbourhood are terms increasingly harped upon by Xi Jinping since his ascent to power. The revival of the ancient ‘Silk Route’ idea is a step in this direction, even though it is primarily motivated by economic and commercial considerations. Along with the Land-based Silk Route, Bangladesh-China-India-Myanmar Economic Corridor (BCIM) and Maritime Silk Route, China seeks to connect Central Asia, South Asia and South-East Asia. Xi preceding the Indian sojourn, with visits to Sri Lanka and Maldives is an affirmation of China’s Maritime Silk Route strategy. While India needs to participate in this initiative and seek areas of possible benefits even while exercising caution, it also needs to come up with its own non-confrontationist, benign alternative initiatives. The recent campaign by Kerala’s Tourism Department to revive the Ancient ‘Spice Route’ linkage could be a step in this direction. Even though the idea herein is emanating from a heritage and tourist point of view, the idea could be expanded and developed further in future to develop it as a possible coastal economic corridor/belt.

A more all-round, multi-dimension based Sino-Indian relations is a strong need in the international system today. Durable and enduring relations would also reflect the maturity and responsibility expected from both the countries. In this regard, much is expected from leadership on both sides in the coming days, which would also be interesting to watch.

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