Modi in China: Barriers and Breakthroughs

By Deepak Parvatiyar

May 19, 2015

Indian External Affairs Minister Sushma Swaraj’s statement made during her visit to Beijing in February this year merits a careful scrutiny. “The two countries have strong leaders. They are also keen on an out-of-box solution,” Swaraj had said about Indian Prime Minister Narendra Modi and the Chinese President Xi Jinping.

More than any ‘out-of-box’ solution to the vexed Sino-Indian relationship, what has stood out during Modi’s recent three-day trip to China where he visited Xian, Beijing and Shanghai, was the camaraderie extended to him by the Chinese. He was frank and candid when he told the top Chinese leadership in Beijing that “Our relationship has been complex in recent decades,” and that there were issues that “trouble smooth development of our relations”.

Irritants in India-China Ties

The boundary dispute, the widening trade deficit with China and the widely held public perception in India that China cannot be taken at face value contribute to the uneasy ties between the two neighbours. What is irksome and raises a question mark on China’s intentions is that the irritants refuse to die. Consider the Chinese Army’s incursion in Ladakh during Xi’s visit to India! This time again, while reporting on Modi’s China visit, the state-owned Chinese CCTV upped the ante by showing an India map without Jammu and Kashmir and Arunachal Pradesh as part of its territory!

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Even if they are dismissed as gaffes (hard to believe this), they unsettle the diplomatic efforts to normalise the ties. Consider how the Shiv Sena – a key constituent of the ruling National Democratic Alliance (NDA) – retorted to the distortion in the India map by the Chinese television: “Our experience has shown that China believes in hugging from the front and stabbing from behind.”

Obviously, such actions and counter reactions add to the trust deficit between the two countries even if Xi had affirmed during his visit to India in September 2014: “China has the determination to work with India through friendly consultation to settle the boundary question at an early date.”

What further unsettles India is China’s failure to honour its commitments in the past. Remember New Delhi’s frustration after the trade talks during the visit of the then Chinese Premier Wen Jiabao in 2010 failed to yield “significant” benefits? Not much headway was made even after India, in 2012, handed over a list of 916 goods that it believed China should purchase in larger quantities.

From the Chinese end, too, the inertia has crippled the bilateral deals and expectations. A case in point is the delay in China’s plans to establish two industrial parks in Gujarat and Maharashtra, as was agreed upon during Xi’s visit.

Did Modi’s Visit to China Lead to Any Breakthrough?

Modi’s visit, therefore, needs to be analysed from the point of view of whether it really initiated some out-of-the box’ solution to some serious long-standing problems such as border dispute, trade deficit and trust deficit. Analysts have already pointed out that there are no breakthroughs on any of the three fronts.

No Major Breakthrough on Border Dispute

Just consider that already there have been 18 rounds of the ongoing special representative dialogue between the two sides to settle the boundary disputes. Even during Manmohan Singh’s tenure, in 2005, Indian and China had signed guiding principles and political parameters for resolving the boundary issue.

“We do not deny that there are some disagreements between us but there is a mechanism and sufficient political maturity to address them,” Chinese Premier Li Keqiang in Beijing acknowledged.

A joint statement made during Modi’s visit though reiterated that India and China “…abide by the three-stage process for the settlement of the boundary question, and continuously push forward negotiation on the framework for a boundary settlement based on the outcomes and common understanding achieved so far…”

Given the nature of the dispute, no major breakthrough was expected during the visit.

Yet, to establish border personnel meeting points at all sectors of the India-China border areas is a welcome step considering that both sides lamented the absence of a well-defined line of actual control between the two countries.

The other initiatives included:

• a) Setting up of a hotline between the military headquarters of India and China
• b)A visit by China’s Vice Chairman of the Central Military Commission to India and another visit by India’s defence minister to China as an exercise to build trust between the two militaries
• c) Increasing the number of meetings between border personnel and commanders at all sectors of the India-China border areas
• d) Exchange of naval visits
• e) Joint counter-terrorism training

Towards Tackling Trade Imbalance

What was significant was that China agreed to hold negotiation on “augmenting the list of traded commodities” – a long-standing demand of India. Besides, as Foreign secretary S.Jaishankar told media persons, a task force had been set up to address the almost $40-billion trade imbalance between the two countries.

The ‘Five-year Trade and Economic Development Plan’ signed during Xi’s visit to New Delhi in 2014 had sought to reduce the bilateral trade imbalance and strengthen investment cooperation among other things bygranting a greater market access to Indian products in pharmaceuticals, handicrafts, textile, gems and jewellery, bovine meat, oil meals, basmati and non-basmati rice, fruits and vegetables.
Through these columns, we had pointed out that it was important for Modi to press for abolishing non-tariff barriers, allowing greater market access, particularly to Indian pharmaceuticals, IT services and farm products firms and simplifying rules and procedures for greater transparency relating to imports. (http://www.elections.in/blog/narendra-modi-on-a-three-nation-tour-again-to-china-mongolia-and-south-korea/)

It can be said that these concerns were considerably addressed and that there was a continuity as highlighted in a joint statement issued during Modi’s visit: “…measures will include cooperation on pharmaceutical supervision including registration, speedier phytosanitary negotiations on agro-products for two-way trade, stronger links between Indian IT companies and Chinese enterprises, and increasing services trade in tourism, films, healthcare, IT and logistics”.The joint statement further stated that the Chinese side will now look into skewed balance of trade by constituting a task force to look into the issue.

Other Developments on Economic Front

It was announced that both India and China will respectively open a new Consulate General in Chennai and Chengdu “in order to facilitate and promote greater cultural, tourism, economic and people-to-people engagement between the two countries”.

Railways was yet another sector, which was identified as an area of cooperation during Xi’s visit, where the Chinese committed to cooperate.
In Shanghai, where Modi addressed executives from 200 Chinese and Indian companies at a business forum, he was able to woo the business leaders to attract investments worth $22 billion. Reports suggest that many of the contracts were for Chinese banks to finance Indian firms, and also included deals in the telecom, steel, solar energy and film sectors. However, what is sure to raise many eyebrows back home for certain reasons is an agreement with the China Development Bank to fund a power plant for India’s Adani Group!

So far so good! But the larger question still remains on the issue of trust deficit between the two countries. It did make sense for both Xi and Modi to stress on civilisational links between the two countries and place importance on people-to-people contacts, art, culture, and tourism (Modi announced e-Visas for the Chinese visitors to India). Opening of a new route through Nathu La to Kailash Mansarovar – a move initiated during Xi’s visit in 2014, was also a step on that direction.

Tangible Results out of Modi’s China Visit

The biggest tangibles that emerged out of Modi’s visit was that the Indian PM was able to convey to the Chinese leadership, in a friendly yet firm manner, that India and China should address issues that lead to “hesitation and doubts, even distrust”. He even used the public platform during his lecture at the Tsinghua University to convey that both India and China need to be “sensitive to each other’s interests” and “think of creative solutions to issues that have become irritants– from visa policies to trans-border rivers”.

Modi, adopting a no-nonsense approach, raised concern with Chinese President over Beijing’s proposed $ 46-billion investment in Pakistan-occupied Kashmir, and called for a mechanism to deal with terrorism.

China seems to have taken note of these assertions as Premier Li said: “We stand ready to work with India to bring China-India relations to new heights”.

In course of Modi’s visit, both India and China seem to have come up with non-controversial “do-ables”. Apparently, given India’s emergence as a key player in Asia Pacific, there is a concerted effort by both Modi and Xi to ease bilateral relationship.. Xi’s visit in 2014 – only the third such visit by a Chinese President since 1996, reflected his zeal. Modi, with his visit, has reciprocated the same to the Chinese establishment. It is time that the Asian giants join hands to celebrate the ‘Asian Dream’.