India-China ties have potential and irritants
As Prime Minister Narendra Modi hosts Chinese President Xi Jinping at the Sabarmati waterfront in Ahmedabad, all eyes will be on the two leaders who together govern one-third of the human race. There is much expectation in the air, with many wondering if the visit will mark a new era in the India-China relationship. While this issue can be best discussed in retrospect, there is no doubt that the trip is a special one. While the visit of a Chinese leader is always a major affair (think of the reception given to the Chinese Premier by the UPA last year), this summit is Mr Modi's biggest foreign engagement at home — and he is going beyond preset diplomatic protocols to make the state visit worth remembering. His decision to welcome President Xi in his home State and show him around the State capital is a fitting gesture, given Mr Modi's decade-long relationship with the Chinese leadership, which held strong even when as Chief Minister of Gujarat, he had been ostracised by the West.
But personal touches apart, the core of the Modi-Xi summit will be strictly business-oriented. India is seeking Chinese investment in its infrastructure development projects, while China is looking for profitable investment destinations for its billions. Chinese funds, as part of the larger foreign investment package, will be crucial to India's rapid economic growth. There is talk about as much as a $100 billion in investment — a slightly unrealistic figure, but let that not take away from the fact that China Inc is eagerly looking to invest in Indian roads, railways, highways, power plants and industrial parks. There is a sense of optimism that with a pro-market leader at the helm in New Delhi, Chinese investors, who have not put in this country a fraction of the money they have deployed elsewhere, will finally consider India a worthwhile destination. The other economic issue that will receive priority attention is the widening India-China trade deficit. India has long been seeking greater access to Chinese markets, especially for its pharmaceutical companies and information technology firms, but to no avail. Also, repeated requests to Beijing to make it easier for Indians to do business in China have fallen on deaf ears. While Prime Minister Modi will bring up the issue with President Xi, no major breakthrough is expected. The trade imbalance will remain for some time to come. The same is also true for the border dispute, the other key irritant in the India-China relationship. President Xi himself has taken a fairly hardline stance on this issue, and even if Prime Minister Modi responds with some equally tough talk (his quip from Japan about an expansionist power was noted in China and elsewhere), the fact is that China, militarily and economically stronger than India, will baulk at making any concession.
From the strategic point of view, President Xi's visit (coming between Mr Modi's hugely successful Japan tour and his much anticipated US trip) will seek to balance Tokyo's influence in Delhi and ensure that India does not participate in Washington, DC's plans for a re-balance in Asia. But as China secures its interests in its own neighbourhood, India should also take the opportunity to do the same on its side of the Himalayas.