Bonding with China

Modi and Jinping boat ride in China. (Photo: PIB)


India and China share very old cultural and civilisational ties. Prime Minister Narendra Modi took the initiative to hold an informal summit from April 28 to 29 at Wuhan with President Xi Jinping to provide the two giants with a new template to revive the old and friendly bonds.

The summit has not only generated an environment of trust and mutual understanding in the region; it is also a testament to the importance of two Asian giants in the global order.

In terms of hospitality, President Xi received Mr Modi twice ~ in 2015 and 2018. The mood at the meetings was perfectly encapsulated in the instrumental cover of a popular Bollywood song from the 80s ~ hon na juda yeh wadda raha ~ by a Chinese orchestra at Xi’s dinner in honour of the visiting Prime Minister.

The Chinese side paid attention to details like decorating the 28 April luncheon menu with the colours of the Indian flag and displaying a peacock on it. Behind this show of bonhomie, which included almost an hour-long boat ride for Xi and Modi, the two leaders examined all major outstanding issues in detail, not the least, the vexed border issue.

Of particular significance was the “strategic guidance” to the militaries to built trust as it was meant to prevent Doklam-like incidents in the future. Building upon the Astana consensus of 2017, the Chinese side said in a statement that both countries had the “maturity and wisdom” to handle their differences through peaceful discussions and by respecting each other’s concerns and aspirations.

“The two militaries will strengthen confidence-building measures and enhance communication and cooperation to uphold border peace and tranquility,” said China’s vice foreign minister, Kong Xuanyou. Importantly for India, Kong said that China was not going to push India to become a part of the Belt and Road Initiative (BRI).

China and India are not only important for each other; their agreements or disagreements on issues can now influence the global narrative. The world today is dealing with intractable issues of terrorism, rise in protectionism and climate change, and both India and China have to make important contributions in these matters.

There are many sore points in Sino-Indian relations. The dispute arising from China’s refusal to accept the McMahon Line as the international border hangs like a sword of Damocles’ over their heads causing strained relations, the standoff at Doklam being an alarming reminder.

China’s unqualified support to Pakistan has also been a cause of concern for India. It has allowed Pakistan to raise its stakes against our country. India has strong reservations about the China-Pakistan Economic Corridor (CPEC) passing through Pakistan Occupied Kashmir, which is part of China’s multi-billion-dollar project ~ BRI. India’s attempt to get Masood Azhar designated as an international terrorist by the United Nations has constantly been vetoed by China.

Beijing has also frustrated India’s goal of becoming a member of the Nuclear Suppliers Group (NSG). China’s refusal to share river water data in Tibet’s dams on the Brahmaputra is also a serious irritant.

China has its own reasons to be frustrated with India. India’s asylum to the 14th Dalai Lama is not viewed very kindly by Beijing. India’s growing proximity with the US and the coalescing of this association with Japan and Australia with a view to ensure freedom of navigation in the South China Sea irks China. It is in this background that this informal summit took place at the initiative of Mr Modi.

In spite of these hiccups, there are several areas in which India and China can benefit by maintaining cordial relations. China is India’s biggest trading partner and runs a considerable balance of trade surplus with India at around $ 50 billion.

India has expressed its discomfort at this skewed trade relationship and China has expressed its willingness to address the issue. With labour costs rising in China, a lot of low value-addition manufacturing will become internationally uncompetitive. India can benefit from this by insisting that Indian MSME clusters be made part of Chinese global supply chain.

The second leg of achieving a trade balance can be higher exports of agricultural, pharmaceutical goods and IT services. India must insist that tariff and non-tariff barriers do not stultify the export of products and services in these categories. India should also insist on local production of Chinese imports to bring down the trade deficit. Such a shift in manufacturing will also complement the government’s ‘Make in India’ initiative.

India also stands to benefit if it can attract foreign direct investment (FDI) from China. According to the RBI’s provisional figures for 2016-17, FDI received from China was a mere $198 million, whereas the total FDI received that year was $36.32 billion.

According to the World Investment Report 2017, in 2016 China was the second largest source of outward FDI, valued at $183 billion. China as a source of FDI is virtually untapped. FDI from China can materialise in the Railways, power, fintech and infrastructure sectors, where India needs huge capital investments.

India can also work with China in such areas as energy security, water security and climate-change. Indian and Chinese interests converge on the issue of energy security, as both are dependent on foreign sources for fossil fuels. China can also help in developing our renewable energy sector.

The gains to China from a cordial relationship with India are also considerable. As China prospers it will need outlets for its capital. India, with its vast market, can be one of the attractive opportunities. China’s ambitious BRI project cannot be truly successful without the participation of India.

The armies of India and China on 1 May held a Border Personnel Meeting (BPM) at Chusul, Ladakh, during which both sides resolved to maintain peace and tranquillity along the Line of Actual Control, besides agreeing to work on additional confidence-building measures (CBM).

It was the first such meeting after Mr Modi and President Xi held the informal summit. Both agreed to strengthen strategic communications between the two sides on security-related issues. The deliberations focused on bringing down tension along the disputed borders and ways to bridge the trust deficit.

In their informal summit, the two leaders decided to issue “strategic guidance” to their militaries to strengthen communications and build trust and understanding between the forces guarding the border of the two countries.

The writer is retired Professor of International Trade. He may be reached at vasu022@gmail.com