Sino-India Relations could Improve under Modi

[t_co]

Asia Times Online :: South Asia news, business and economy from India and Pakistan

Hopes are rising that by the time results are finally announced on May 16, India's gargantuan six-week election process will have set the stage for a new era in its ties with China. Despite being touted as this century's most crucial bilateral relationship, the India-China dynamic has underwhelmed so far.

Most of the potential for transformation lies in the realm of trade and investment, with companies on each side eyeing the large market on the other side of the Himalayas.

Indian imports from China have grown faster than Indian exports to China, resulting in a embarrassing trade imbalance which New Delhi finds difficult to control. Chinese manufacturers also have gained significant a market share in India's power and telecom sectors.

At the same time, Chinese investment in India remains far lower than in many other Asian countries. Most Chinese companies consider the Indian regulatory regime opaque at best - and hostile at worst - despite the Indian government's welcoming noises.

During his tenure as chief minister of Gujarat since October 2001, Narendra Modi has already played a key role in the bilateral relationship between India and China. As one of the few state-level politicians in India to have been hosted by the ruling Chinese Communist Party, he has nurtured a mutually beneficial relationship at the highest levels.

The US government's refusal to grant a visa to Modi over the last few years has also played the role of an invisible hand propelling Modi firmly in China's direction.

Not surprisingly, Gujarat and Modi's key constituents have benefited enormously from Chinese investment and loans. Chinese companies big and small have come to view Gujarat as India's answer to Guangdong province, from where a cluster of boom towns catalyzed economic prosperity in the Middle Kingdom couple of decades ago.

In January 2010, when Gujarati diamond traders were arrested in China, the Indian government's efforts at freeing them failed to bear fruit for almost two years. It was only after Modi's visit to China that they were freed in December 2011.

The Indian establishment has been crying hoarse for Chinese investment in infrastructure for several years now, but there has been barely a trickle in response. China's lukewarm response can perhaps be attributed to India's labyrinth of labor and land acquisition laws.

Despite this, after Modi emerged as a prime ministerial candidate in September 2013, the Chinese government immediately upped the ante by offering to meet 30% of the total demand for investment in India's investment sector until 2017. It is difficult to avoid reading between the lines and seeing this as an endorsement of China's faith in Modi to walk the talk should he take the helm after the general elections.

The inherent strength of the Modi-China relationship is underscored by Chinese media's response to Modi. The prime ministerial candidate made an election speech in Arunachal Pradesh in February asking China to back-off from its claim over the province, which it claims as South Tibet, yet Chinese official media quickly downplayed Modi's words as an necessary electioneering tactic.

Such bonhomie can be a crucial ingredient in the concrete that cements India-China ties over the next five years. India could very easily change the trajectory of its economic growth for the better by tapping China's experience in economic development. The opportunity can also be just as easily squandered if Modi chooses to wear a saffron hat and treat China just as another enemy of India like Pakistan, China's best friend in South Asia.

 

[t_co]

What you might find interesting is that China's massive infrastructure investment package was first floated through a backchannel to Modi, and not to the Indian government. A few weeks ago, a Singaporean diplomat (who I will not name) disclosed that the backchannel was none other than Gautam Adani.

 

[Hari Sud]

Modi's policies are unlikely to be China centric. Unless of course Modi decides to sell India Treasury bonds on the lines of US Treasury bonds, and China buys them with same enthusiasm as they have been buying US bonds for the last twelve years. Then India has the money and Chinese have India's pledge to return money in one form or other (same pledge as US has given to China).

My China friend above should run this proposal by Singapore diplomat and watch what comes out of his thinking.

Then again today's China is built by US with FDI, investments, better currency exchange rate etc. India is not going to be that lucky. As an alternative India bond sale is a better idea and China is familiar with it.

 

[thakur_ritesh]

To me, it will never be a surprise, typical of a Gujju, he is diehard pro-business. If he gets to be the PM, businesses in India, and foreign investments into the country will grow at significantly higher pace than have so far.

The other, that I am pretty certain of, India will end up having way better relations with both the US, and China over the next 5 years. Modi is a very pragmatic person, he realises well where the goodies for the country lie, and he would chase them.

The inherent strength of the Modi-China relationship is underscored by Chinese media's response to Modi. The prime ministerial candidate made an election speech in Arunachal Pradesh in February asking China to back-off from its claim over the province, which it claims as South Tibet, yet Chinese official media quickly downplayed Modi's words as an necessary electioneering tactic.

The good thing about a hardened exterior is that people and countries do not take you for granted, which is what was happening with the successive Congress governments. They were always perceived as weak, and government most of the time internationally ended up getting side kicks. We had a PM, who let alone making a speech in Arunachal, would end-up cancelling his programs to the state because that might upset the government of China.

I would love to see the military take over in Pakistan, a civilian government there, and Modi in India is not a good news. Civilian government will always be undermined in Pakistan on their initiatives towards India, so it was better India gets to deal with the military directly.

 

[DivineHeretic]

Economics and economic cooperation will undoubtedly be the linchpin of BJP's foreign policy strategy.They showed it with their last tenure that they don't carry the historical baggage in the same manner a Congress led would. As such I do expect China-India economic relationships to improve on the economic front.

But depending on the situation, that is both a good and an extremely bad. The BJP doesn't carry the dead weight of 1962 defeat. It is that fear that has prevented India from reacting aggressively to perceived Chinese hostile actions.

As such if any such incident does erupt after their ascendancy to power, The Indian response will be quite vigorous. I do hope that CCP recalculates their strategy. There won't be much of a tolerance for Chinese belligerence

 

[tarunraju]

Modi wants to avenge US snub with greater ties with China and Russia. What you could expect if Modi comes to power:

• Russia-China-India energy corridor: An oil and gas pipeline network between the three countries
• China-India railway: A railway line between China and India, with a gauge interchange hub on the border (since China and India have different railway gauges).
• China-India-West Coast transit: Transit of shipping containers over railway from China to India's western ports (JNPT and Kochi), and onwards to middle east and Europe, reducing transit over the Malay peninsula.
• Electricity trade between China and India (purchase of surplus electricity from Chinese grid)
• Chinese white-box foundries setting up facilities in India
• RMB-INR trade
• Sensible dialog over disputed borders without 1961 baggage and pointless jingoism
• Deeming Kailash Mansarovar shrine in Tibet as an SAR, with easy visa regime for Indian pilgrims, and increased facilities for tourists (hotels, hospitals, shopping, etc.)
• Reduction of Chinese affinity for Pakistan
• Indian permanent membership of SCO