Modi-Xi play date may open a new set of opportunities

By Saroj Mohanty,

As visiting Chinese President Xi Jinping and Indian Prime Minister Narendra Modi prepare to hold summit talks Thursday, there is much anticipation that the two Asian neighbours may move in a new direction, away from historical mistrust and latent geopolitical rivalry.

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The expectations have been raised by both sides. Known for his penchant for catchy phases, Modi has coined a slogan “Inch (India and China) towards Miles (Millennium of Exceptional Synergy)”. Last week, India’s National Security Advisor Ajit Doval, after meeting Xi and Foreign Minister Wang Yi in Beijing, said Sino-Indian relations are poised for an “orbital jump”.

The talks between the two leaders, he said, may “open possibilities” for resolving the decades-old border dispute. And Commerce and Industries Minister Nirmala Sitharaman added more grist, saying the complex and difficult ties between the two countries would see a “directional change” during Xi’s visit.

The Chinese on their part have described the Xi visit, his first to India as China’s top-most leader, as “historic” and would mark the start of “another era”. The official news agency Xinhua in a report quoted Foreign Minister Wang as saying that China is ready to cooperate with India to settle the border issue.

“Our overall thinking is that China and India, as two big neighbours, as two big markets and as two of the world’s major civilizations should unite for even closer cooperation so that together we can usher in a new path of growth and development for Asia in the 21st Century,” Wang said during the recent Shanghai Cooperation Organisation meeting in Dushanbe. And Assistant Foreign Minister Liu Jianchao insisted that Beijing has no plans to “helm in” or “encircle” India.

In fact, talk about a possible breakthrough in the territorial dispute has been in the air since both Modi and Xi met during the BRICS summit in July in Brazil. In their one-on-one meeting, Modi emphasized the necessity of resolving the long-standing boundary dispute and Xi called for a “negotiated solution” at an early date.

It is matter of speculation where the two sides will arrive. But it is the wider strategic environment in the Asia-Pacific and the economic imperative in both the countries that are driving the two countries somewhat closer.

Also, bilateral relations are no more government-led. There are new players like the private sector in both the countries which wants closer ties and the state governments that have their own interests. As chief minister of Gujarat, Modi has pursued business and investment from China for the state.

Xi’s visit is taking place amidst a season of hectic big power diplomacy. Modi is just back from a successful summit with Shinzo Abe of Japan and will leave for the US later this month for talks with President Barack Obama. This is all happening at a time when China’s ties with its other Asian neighbours such as Japan, Vietnam and the Philippines have soured over maritime disputes in East and South China Sea, which has led to the US “rebalacing” and resuscitation of its alliance system in Asia.

In such a context, it is apparent that China does not want a situation where India would be on the side of its neighbours to its east and southeast. Xi has earlier referred to the idea that Asians should take care of Asian security and at the BRICS summit he said China and India should “join hands in setting global rules so as to raise the voice of developing countries”. China has been assiduously courting South Korea, a US ally.

China wants to expand substantially the economic relationship with India now. This has a synergy with the plans of the Modi government which looks up to East Asia-type development, of which China is a example of great success.

While India is needing huge overseas funding to overhaul its infrastructure necessary for economic revival, China is seeing India as a major economic opportunity, a large market where it can deploy the massive industrial capacity of its state-owned enterprises and capital goods sector. China is also going in for a rebalancing of its economy, away from investment and exports to consumption and create domestic demand. Rising production costs are forcing it to diversify.

China is India’s biggest trading partner, with two-way commerce totalling close to $70 billion. But India’s trade deficit with China has soared to more than $40 billion from just $1 billion in 2001-02. This imbalance between the two countries is a major issue and the sides are expected to initiate policies to change the “neo-colonial” pattern of relationship – India exporting mostly raw materials and importing finished products.

At the same time, Xi is seeking to strengthen bilateral engagement with India to enhance cooperation on a variety of multilateral issues in which it has large say, and is encouraging India to actively take part in the maritime Silk Road and the Bangladesh-China-India-Myanmar infrastructure and economic corridor to enhance trade and business ties.

The Modi government’s China policy is slowly becoming clear. It is seeking to deepen economic cooperation, settle the boundary dispute while trying to enhance its strategic influence in Asia. On the election campaign trail, Modi promised to be tough on security issues. In a speech in Tokyo, he alluded to China’s “expansionist” mindset.

In recent weeks, his government has taken steps to boost infrastructure and connectivity on the Chinese border. It has moved to revitalize India’s neighborhood ties. And thanks to the country’s Look East policy, China has come to realize that it cannot prevent India from enhancing its relationship with Japan or improving its relationship with ASEAN.

The present leadership in both countries are strong and the external environment is conducive for India as it is courted by other major powers. As leader of a nationalist party which holds a majority in parliament, Modi is best placed to achieve a border settlement, a process that has gone on for three decades. Can Modi balance China with Chinese characteristics?

(17.09.2014 – Saroj Mohanty is a senior journalist and analyst. The views expressed are personal. He can be contacted at [email protected] )