PM Modi China Visit: Radical Shift or Just More of the Same?

Prime Minister Narendra Modi will be visiting China on April 27 and 28 to have an unofficial summit with the Chinese President Xi Jinping. Such sudden and dramatic moves by top level leaders have a tendency to raise expectations sky high. New vistas appear before the mind’s eye promising peace, stability and a better tomorrow.

Modi has a habit of making dramatic gestures. In fact, he began his innings as PM in May 2014 by inviting heads of all SAARC governments for his oath taking ceremony. Such moves have got him media attention and accolades from a gullible public who do not see beyond the façade of political theater.

But even in Modi’s case, the value of such gestures has depreciated over time in the absence of follow up action to justify the symbolism.

Modi raised expectations about a sharp turnaround in India-Pakistan relations in December 2015 when he took a detour and landed in Pakistan for an impromptu tete-a-tete with the then Pakistan Premier, Nawaz Sharif. But nothing came of the visit.

Against that background will the suddenly arranged and informal summit with Xi Jinping lead to tangible changes in India’s China policy ? Or will it be another edition of Modi’s 2015 impulsive air dash to Pakistan which led to nothing?

However, Modi’s move and Xi’s nod to it, have been welcomed by the Indian and Chinese leadership.

Former Indian Foreign Secretary S.Jaishankar described the dash to China as a “very bold step.” Chinese Foreign Minister Wang Yi told the visiting Indian Foreign Minister Sushma Swaraj last week, that the Modi-Xi interaction will be meaningful because the two leaders are meeting when “China is building socialism with Chinese characteristics and India is at a crucial stage in its development and revitalization.”

On her part, Swaraj appreciated China’s confirmation about the resumption of data sharing on the Brahmaputra and Sutlej rivers in 2018. She also expressed happiness over the resumption of the Kailash Mansarovar Yatra through the Nathu La route this year.

Apparently, issues bedeviling India-China relations were skirted in the Swaraj-Wang talks to keep the momentum going. And the ticklish issues include: the question of the China-Pakistan Economic Corridor (CPEC) passing through disputed Gilgit-Baltistan; and China’s opposition to India’s entry into the Nuclear Suppliers’ Group (NSG) and to India’s bid to get the UN to list the Pakistan-based Masood Azhar as a global terrorist. These issues had been holding up moves to reach a détente.

It is not possible to predict what Modi and Xi will talk. But as former Foreign Secretary Jaishankar said, personal diplomacy could lead to far reaching policy changes and significant adjustments.

But informed sources say that if the two leaders do not get off the beaten track and think out of the box, this meeting like the ones earlier, will be fruitless.

The two leaders should have a deeper look at the problems facing bilateral relations; re-asses the importance and relevance of each issue in a changing context; and identify areas of mutual cooperation which could lead to investment, trade and cooperation in other fields.

China’s expectations:

According to sources China would expect India to be realistic in its assessment of the impact of its huge and growing investments in South Asia, India’s backyard. It would like India to stop making a fuss about CPEC’s passing through Gilgit-Baltistan since it is not possible for India to retrieve this area from Pakistan (just as Pakistan cannot wrench Kashmir from India).

China would also want India to stop looking at every new infrastructural facility created by it in a South Asian country as a threat to India’s security and prevent its neighbors from having normal ties with China.

Beijing would want India to shed its fear about allowing China to invest in its infrastructural developmental areas including ports and telecom. China would like India to understand that increased Chinese investments will help change the currently unbalanced bilateral economic relations.

Given its excess capacity, China is very keen on investing in India which is yet to develop its infrastructure. It wants India to be part of the Belt and Road Initiative (BRI) and also share the international projects coming under it across the globe.

India’s expectations:

On its part, India would like China to support India’s bid to be admitted to the Nuclear Suppliers’ Group (NSG) which is a prestige issue.It also wants China not to block its bid to get the UN to list Pakistan-based Massod Azhar declared as a UN-designated terrorist since cross-border terror attacks have been a menace.

With the border issue having been put on the back burner by mutual consent since the early 1990s, the issue currently crying for a solution is the trade imbalance which has been growing by leaps and bounds.

Though virtually at war since 1962, China has emerged as India’s largest trading partner with bilateral trade reaching US$ 72 billion in 2016-17, an increase of 88% from US $38 billion in 2007-08.

But India’s imports from China amounted to US$ 61 billion while China’s imports from India was only U$ 10 billion in 2016-17, making rising trade imbalance a major concern for India, points out an analysis put out by IndiaSpend.

India’s trade deficit with China increased from US$ 16 billion in 2007-08 to US$ 51 billion in 2016-17 - an 219 % jump.

India’s imports from China have more than doubled (125%) over the last decade, from $27 billion in 2007-08 to $61 billion in 2016-17. Imports crossed $63 billion in January 2018 a ten year record.

India’s major exports to China include ores, slag and ash, cotton, organic chemicals, mineral fuels/oils, copper and its articles. Imports include telecom instruments, electronic components and instruments, computer hardware, organic chemicals, plastics and plastic items.

The Minister of State for Commerce, P.K.Chaudhary, told the parliament’s Upper House on March 7, 2018 that imports exceed exports because of shortages/non-availability of items domestically or because of the cost competitiveness of the foreign manufacturers.

Then there is the price differential. For example, Chinese solar cells cost 35% less and solar panels 10-15% less compared to locally made ones, IndiaSpend points out.

According to Minister Chaudhury, among reasons for the poor manufacturing capacity in India are high cost of land and electricity; low capacity utilization; and high cost of financing.

The website IndiaSpend said that India ranked 30 th. among 100 countries on the “Structure of Production Scale”, a global manufacturing assessment index created by the World Economic Forum (WEF). Japan topped on this scale, followed by South Korea, Germany, Switzerland and China.

India scored 5.99 on the index (on a scale of 0-10, where zero is the worst and 10 the best score), as compared with China’s 8.25 and Japan’s 8.99. The WEF report cited human capital and sustainable resources as the two key challenges for India.

No doubt, there have been significant efforts to increase investments in India through initiatives like ‘Make in India’, but still, India is far behind China. India’s infrastructure is poor compared to China’s. Connectivity and uninterrupted electricity supply are lacking.

Indian Prime Minister wants to fast track normalization of relations with China before the Shanghai Cooperation Organization (SCO) summit in June this year. This is part of his bid to have strategic and economic breakthroughs ahead of the Indian parliamentary elections in May 2019.

But the fundamental question is: “Is Modi ready make radical changes in his thinking and weave India’s economic interest with China’s? Will he accommodate the Xi’s pet project, the Belt and Road Initiative in the South Asian region and even make India part of it? “

To Xi, this will be the litmus test of Modi’s sincerity about improving relations with China. If he doesn’t pass, Sino-Indian relations will be back to square one, marked by suspicion, obstruction and hidden animosity.