Life after Xi

In terms of the informal welcome and the potential it held out, Chinese President Xi Jinping’s three-day India visit was markedly different from that of his predecessors. Coming at a time when both nations are eager to upgrade bilateral cooperation, the visit offered China an opportunity to lay the foundation for a closer geopolitical relationship — Beijing has noted, and with some discomfort, the increased intimacy between Tokyo and Delhi following Prime Minister Narendra Modi’s visit to Japan and what it sees as the threat of India-US-Japan strategic cooperation in the Indo-Pacific. India, on the other hand, wants peaceful ties with China for its own rise and Chinese investments in infrastructure and manufacturing. The visit, as Xi himself pointed out, brought India-China relations to “a new starting point”.

However, the ongoing border dispute continues to cast a shadow over bilateral relations. Modi’s decision to air India’s security concerns publicly in the joint press conference with Xi shows how importantly the new government looks at this issue. But the Chinese side responded quickly to India’s concerns with the joint statement saying “peace and tranquillity on the India-China border areas was recognised as an important guarantor for the development and continued growth of bilateral relations”. Also, for the first time, both sides said an “early settlement” of the boundary question should be pursued as “a strategic objective”, indicating the urgency and importance the issue got in the overall bilateral engagement. On the larger issue of trade and investments, the outcome has been less satisfactory. Although India did extract a promise from China to address the current imbalance in bilateral trade, it needs to look beyond trade imbalances to the larger benefits of a greater engagement with China. India’s trade with China is out of balance not only in money terms, but in its composition — it exports mainly commodities and imports mainly manufactured goods. With Modi pushing India as a manufacturing hub, one had hoped to see a stronger attempt by India to go up the value chain. Given India’s infrastructure requirements and China’s competitiveness in this area, as well as India’s competitiveness in services and China’s huge demand for the same, greater stress could have been laid on addressing ways to enhancing these flows.

For Modi, this is another milestone of his ‘Look East’ policy. Ever since he came to power in May, the Prime Minister has tried to build a foreign policy agenda based on two principles — peaceful periphery and greater economic cooperation with Asian powers. During his visit to Japan early this month, Tokyo had promised investments worth $35 billion in India. Now with an evident warming up to China days ahead of his US visit, the Prime Minister has strengthened this approach. But it remains to be seen how this policy will evolve in the wake of potential geopolitical tensions in the East, especially the growing rivalry between China and Japan.

COMMENT NOW