China PM seeks to ease political tensions with India

China PM seeks to ease political tensions with India

New Delhi: Chinese Premier Wen Jiabao on Thursday tackles the tough task of bridging rifts with India over borders and Pakistan after wooing his hosts with deals worth more than $16 billion during a visit to New Delhi.

Wen’s visit is the first by a Chinese premier in five years and he brings more than 300 business executives with him.

The two countries, home to more than a third of the world’s population, fought a war in 1962 and relations remain uneasy over disputed borders, and China’s close ties with India’s main rival, despite their booming trade relationship and rising global clout.

Wen is set to address these long-running Sino-Indian political stalemates with Indian Prime Minister Manmohan Singh.

“There is a trust deficit, a trade deficit but certainly not a charm deficit," said broadcaster CNN IBN deputy editor Sagarika Ghose. Wen, shortly after arriving in Delhi on Wednesday, told business leaders the world was big enough for both India and China to develop, saying they were not rivals.

India and China are the world’s fastest-growing major economies. India fears China wants to curtail its rise as a global power, and is also unhappy about Wen’s plans to travel to nuclear-armed rival and neighbour Pakistan on Friday.

“Terror of any kind... cannot be an instrument of state policy. I think that is the message we will convey to Prime Minister Jiabao and hopefully he will convey that to Pakistan," Indian foreign minister S.M. Krishna told CNN IBN.

India and Pakistan have fought three wars since independence from Britain in 1947 and New Delhi broke off peace talks after Pakistani militants attacked landmarks in Mumbai in 2008, killing 166 people.

India also fears China wants to restrict its global reach by possibly opposing its bid for a permanent UN Security Council seat or encircling the Indian Ocean region with massive projects from Pakistan to Myanmar.

These concerns are emotive issues. Karan Singh, an member of parliament for the ruling party, refused to accept an award conferred by Wen at a China-India Friendship Awards ceremony, saying it would give the impression he was “pro-China".

Charm Offensive

Long wary of Washington’s influence in South Asia, Beijing’s overtures toward New Delhi come just a little over a month after US President Barack Obama’s trip to India, during which he endorsed India’s long-held demand for a permanent seat.

Both Asian giants have stood together to resist Western demands in world trade and climate change talks.

“In recent years, the Chinese-Indian relationship has become even richer in substance and its influence has expanded," Wen said in remarks during a reception dinner hosted by Singh on Wednesday, according to Chinese newspapers.

“I hope that my visit will enhance mutual trust between China and India, and spur greater progress in cooperation and exchanges between our two countries," he said.

“The 21st century is the Asian century."

Wen announced on Wednesday that Chinese companies would sign deals with Indian firms worth more than $16 billion ranging from power equipment to telecoms gear—underscoring business was driving the relationship, for now.

Although both India and China have said they are exploring a possible free-trade agreement, no real progress is expected on that front as there is some scepticism in New Delhi that Beijing may only want to dump cheap manufactured goods on India’s booming $1.3 trillion economy.

Wen’s avuncular style contrasts sharply with that of Singh, who is seen as shy and lacking charisma. Singh is also engulfed in what may be India’s biggest corruption scandal, which is threatening the stability of the Congress party-led coalition government.

China is now India’s largest trade partner and two-way trade reached $60 billion this year, up from $13.6 billion in 2004.

Still, total investment by China in India is small, amounting to only $221 million in 2009, representing about 0.1% of China’s total outward foreign direct investment in that year.

That figure is seven times less than what China has invested in Pakistan, according to data from China’s Ministry of Commerce.

The two nations have pursued divergent paths in their development: for India, a democracy, economic reforms began only in 1991; for China, a one-party state that implemented market reforms in 1979, catapulting the country’s economy.

While the two are often lumped together as emerging world powers, China’s GDP is four times bigger than India’s and its infrastructure outshines India’s dilapidated roads and ports, a factor that makes New Delhi wary of Beijing’s growing might.