Business News/ Politics / Policy/  Xi Jinping, Narendra Modi get down to business in Gujarat

Xi Jinping, Narendra Modi get down to business in Gujarat

Agreements include sister city pact between Guangzhou in China and Ahmedabad and setting up of an industrial park in the state

India’s Prime Minister Narendra Modi (right) and China’s President Xi Jinping (centre) shake hands as Xi’s wife Peng Liyuan looks on before their meeting in Ahmedabad on Wednesday. Photo: ReutersPremium
India’s Prime Minister Narendra Modi (right) and China’s President Xi Jinping (centre) shake hands as Xi’s wife Peng Liyuan looks on before their meeting in Ahmedabad on Wednesday. Photo: Reuters

Ahmedabad: Chinese President Xi Jinping arrived in India on Wednesday and struck an immediate rapport with Prime Minister Narendra Modi on the latter’s homeground, as the Asian neighbours attempt to write a new chapter in a relationship marred by mutual mistrust and memories of a bitter border war 52 years ago.

The new relationship is being moulded around a closer economic partnership, which is being extended to social and cultural ties. Evidence came in the form of three pacts signed within hours of the arrival of Xi, whose flight touched down in Ahmedabad, the commercial capital of Gujarat, Modi’s home state.

The pacts include one on setting up of industrial parks in Gujarat—with focus on electronics and electrical goods. It was signed between China Development Bank (CDB) and Industrial Extension Bureau (iNDEXTb) of the Gujarat government. “So far, Chinese investment in Gujarat is about 700 crore. We are confident that this figure will go up immensely. A land parcel of about 400 acres near Vadodara has been identified by China to set up an industrial park," said Gujarat’s additional chief secretary D.J. Pandian at a press conference on Wednesday.

Guangzhou city, China and Ahmedabad are to become sister cities under another agreement while the third envisages promoting cultural and social ties between Guangdong province and Gujarat.

Keen to boost its trade ties with India, which has been seen as moving close to China’s traditional rival Japan, the Chinese side has already indicated that it will pledge to invest billions of dollars in railways, manufacturing and infrastructure projects in India during Xi’s three-day visit—the third by a Chinese president to India since 1996.

Earlier this month, during a visit to Japan by Prime Minister Modi, Japanese Prime Minister Shinzo Abe promised India $35 billion in seven years in the form of investments and soft loans.

Strengthening India’s manufacturing base to ensure jobs for the thousands of young Indians entering the work force each year was one of Modi’s key election planks in the April-May Lok Sabha polls.

Later on Wednesday, Xi sported an Indian look, donning an off-white khadi jacket presented to him by Modi soon after his arrival for a visit to Mahatma Gandhi’s Sabarmati Ashram in Ahmedabad.

Modi took Xi on a tour of Gandhi’s personal quarters, where Xi tried his hand at the charkha or the spinning wheel. The charkha is seen as a symbol of self-reliance and was used by Gandhi to spin cotton thread in a message to the British colonial rulers that India could make its own cloth and didn’t need the machine-made variety imported into India.

The two leaders then took a stroll along the Sabarmati river before sitting down to a dinner along the riverfront.

The ease and bonhomie in interaction between the two leaders are expected to help the two grapple with the more serious issues bedevilling relations between India and China, during talks in New Delhi on Thursday.

The main irritants in the India-China relationship include a festering boundary dispute, a ballooning trade imbalance in China’s favour, Chinese infrastructure construction in Pakistan-administered Kashmir, which is disputed between India and Pakistan, and China issuing stapled visas to people from Arunachal Pradesh.

China claims 90, of Indian territory in Arunachal Pradesh and occupies around 38, in Jammu and Kashmir. Also, under an agreement signed between Pakistan and China in March 1963, Pakistan illegally ceded 5, of Indian territory in Pakistan-occupied Kashmir (PoK) to China.

India and China also regularly accuse each other of incursions into the other’s territory, the latest being media reports of a new face-off at Demchok region in Kashmir area over the weekend.

From the Chinese point of view, that India continues to host the Tibetan spiritual leader the Dalai Lama whom China regards as a “splittist", is an irritant. India’s outreach to countries like Japan, Vietnam and others in Southeast Asia is also viewed with suspicion by China, which claims the South China Sea as part of its territorial waters.

In a seemingly bold move, India on Monday extended a $100-million export credit for defence deals to Vietnam and increased energy ties with the country, which has strained ties with China, over an increasingly ugly territorial dispute in the South China Sea.

So far, the new Indian government has suggested that it would be adopting a more muscular approach than its predecessor while dealing with China.

Modi, as a prime ministerial candidate in February, warned China against its expansionist tendencies. The external affairs minister Sushma Swaraj has demanded reciprocity in respecting sensitivities on territorial issues.

In the nearly four months that it has been in office, the Modi government has also eased restrictions on building roads and military facilities along the border to boost defence preparedness and close the gap on China’s superior transport network.

Earlier this week, Xi visited Sri Lanka and Maldives, both traditional allies of India that have unnerved New Delhi by growing closer to Beijing—a move Modi appeared unperturbed by.

In New Delhi on Thursday, Xi is expected to loosen the purse strings and pledge up to $50 billion in investments to upgrade railway infrastructure and roads in India, besides two industrial parks. The nearly $7 billion investment in the industrial parks is aimed at reducing trade imbalances.

China is India’s biggest trading partner, with annual two-way commerce of more than $65 billion. But Indian data show the trade deficit with China has soared to more than $40 billion from just $1 billion in 2001-02.

Xi is also expected to persuade India to join its efforts to establish a maritime “Silk Route" used by travellers and businessmen from Asia and Europe to conduct trade.

According to media reports, China is looking at establishing a maritime “Silk Route" through Southeast and South Asia and Xi’s visits to the Maldives and Sri Lanka before arriving in India is part that effort. Beijing is also keen on an economic corridor that links Bangladesh, China, India and Myanmar (BCIM)—an idea India is warming to.

“The BCIM corridor is an alternate to the Stilwell route," said Gautam Bambawale, India’s ambassador to Bhutan, referring to a road dating back to World War II, which is a 770 km highway that links northeastern India with Myanmar and China.

India has been wary of opening this route for economic activity given its proximity to Arunachal Pradesh.

The alternative BCIM route “connects northeast India to Myanmar and Southwest China. India is humming with business activity and if it has to grow and export more, it will have to increase linkages with China," Bambawale said.

Neelam Deo, director at Gateway House think-tank in Mumbai, sounded a note of caution. “China can be a truly valued economic partner if it removes barriers to India’s exports for balanced trade, in addition to the investments being talked about...," Joshi said.

“Commercial exchanges between the two countries will invariably encounter obstructions unless nagging political issues are addressed, including the land boundary which is increasingly the subject of Chinese intrusions linked to high-level visits from China. Repeated bilateral meetings between high-level representatives of the two countries have yielded little in this matter so far," she said.

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Updated: 17 Sep 2014, 11:39 PM IST
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