India and China share very old cultural and civilisational ties. Prime Minister Narendra Modi took initiative to hold an informal summit on 28 April to 29 April at Wuhan with Chinese President Xi Jinping to provide the two giants with a new template to revive old bonds.
The ‘informal’ summit meeting of Prime Minister Narendra Modi at Wuhan with the Chinese President Xi Jinping has not only created a trust and mutual understanding environment in the region but also is testimony to the importance of two Asian giants in the global order. Xi though more than made up for it with his hospitality which saw him stating towards the end that as president he had stepped out of Beijing to receive a foreign leader Modi only twice in 2015 and 2018. The mood in the meetings was perfectly encapsulated in the instrumental cover of a popular Bollywood song from the 80s, hon na juda yeh wadda raha, by a Chinese orchestra at Xi’s dinner for Modi.
The Chinese side paid attention to details like decorating 28th April lunch menu with the colours of Indian flag and displaying a peacock on it. Behind this show of bonhomie, which included almost an hour-long boat ride for Xi and Modi, the two leaders did look at all major outstanding issues in detail, not least the vexed border issue.
Of particular significance was the “strategic guidance” to the militaries to built trust as it was meant to prevent Doklam-like incidents in the future? Building upon the Astana consensus of 2017, the Chinese side said in a statement that both countries had the “maturity and wisdom” to handle their differences through peaceful discussion and by respecting each other’s concerns and aspirations.
“The two militaries will strengthen confidence-building measures and enhance communication and cooperation to uphold border peace and tranquility,” said China’s vice foreign minister Kong Xuanyou. Importantly for India, Kong said that China was not going to push India to become a part of the Belt and Road Initiative (BRI). He said actually there was no disagreement in principle between India and China on connectivity issues.
The two counties indeed are expanding their cooperation on connectivity. Personally I don’t think it is important to see if India accepts the expression of the BRI,” said Kong.
China and India are not only important for each other; their agreements or disagreements on issues can now influence the global narrative. The world today is dealing with intractable issues of terrorism, rise in protectionism and climate change, and both India and China have to make important contributions in these matters.
Sore points between two countries
There are many sore points in Sino-Indian relations. The dispute arising from China’s refusal to accept McMahon Line as the international border hangs like Damocles’ sword over their heads causing strained relations as, the standoff at Doklam was an alarming reminder of it.
China’s unqualified support to Pakistan has also been a cause of concern for India. It has allowed Pakistan to raise its stakes against India. Indiahas strong reservations about China-Pakistan Economic Corridor (CPEC) passing through Pakistan Occupied Kashmir, which is a part of China’s multi-billion-dollar BRI.India’s attempt to get Masood Azhar designated as an international terrorist by the United Nations has constantly been vetoed by China.
It has also frustrated India’s goal of becoming a member of the Nuclear Suppliers Group (NSG). China’s refusal to share river water data in Tibet dams on Brahmaputra is also a serious irritant.
China has its own reasons to be frustrated with India. India’s asylum to Tibetan leader His Holiness the 14th Dalai Lama is not viewed very kindly by it. India’s growing proximity with the US and the coalescing of this association with Japan and Australia with a view to ensure freedom of navigation in the South China Sea irks China.
China’s riding roughshod over its smaller neighbours has led these countries developing closer ties with India, which, even with all its limitations, is seen as a country that can stand up to China. It is in this background that this informal summit took place with the initiative from PM Modi.
Benefits to both the countries
In spite of these hiccups, there are several areas in which India-China gets benefitted by maintaining cordial relations. China is India’s biggest trading partner and runs a considerable balance of trade surplus with India at around $50 billion. India has expressed its discomfort at this skewed trade relationship and China has expressed its willingness to address the issue.
With labour costs rising in China, a lot of low value-addition manufacturing will become internationally uncompetitive. India can benefit from this by insisting that Indian MSME clusters be made part of Chinese global supply chain.
The second leg of achieving trade balance can be higher exports of agricultural, pharmaceutical goods and IT services. India must insist that tariff and non-tariff barriers do not stultify the export of products and services in these categories. India should also insist on local production of Chinese imports to bring down the trade deficit. Such a shift in manufacturing will also complement the government’s ‘Make in India’ initiative.
India also stands to benefit if it can attract foreign direct investment (FDI) from China. According to the RBI’s provisional figures for 2016-17, FDI received from China was a mere $198 million whereas the total FDI received that year was $36.32 billion.
According to the World Investment Report 2017, in 2016 China was the second largest source of outward FDI, at $183 billion. China as a source of FDI is virtually untapped. FDI from China can be in railways and the power, fintech and infrastructure sectors, where India needs huge capital investments.
India can also work with China in the areas of energy security, water security and climate change. Indian and Chinese interests converge on the issue of energy security, as both are dependent on foreign sources for fossil fuels. China can also help in developing our renewable energy sector.
Gains to China from a good relationship with India are also considerable. As China prospers it would need outlet for its capital. India, with its vast market, can be one of the attractive opportunities. China’s ambitious BRI project cannot be truly successful without the participation of India.
Immediate results of summit
Resultantly, Armies of India and China on 1st May held a Border Personnel Meeting (BPM) at Chusul, Ladakh during which both sides resolved to maintain peace and tranquillity along the Line of Actual Control, besides agreeing to work on additional confidence building measures (CBM).It was the first such meeting after Prime Minister Narendra Modi and Chinese President Xi Jinping held an informal summit in the central Chinese city of Wuhan during which they agreed to strengthen strategic communication between the two sides on security-related issues.
They said the deliberations focused on bringing down tension along the disputed borders and ways to bridge the trust deficit In their informal summit, Modi and Xi had decided to issue “strategic guidance” to their militaries to strengthen communication and build trust and understanding between the border guarding forces of the two countries.
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