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Xi Jinping in India: Economic focus suits both sides

Xi Jinping in India: Economic focus suits both sides

Prepare yourself for a glut of feeble anthropomorphic metaphors (elephants, pandas, tigers, and dragons are all anticipated) and bloviating communiqués: India-China diplomacy is underway.

President Xi Jinping today begins the first Chinese visit to India since the election of Prime Minister Narendra Modi. Laying the groundwork for this trip, Indian Vice President Hamid Ansari traveled to Beijing in June, followed by National Security Advisor Ajit Doval last week.

Xi's arrival is rich with symbolism, as the trip begins not in Delhi, as would be typical, but Ahmedabad. This is the commercial capital of Modi's home state, Gujarat, viewed by many (though not all) as a model of development for the rest of India. It is by some measures the most economically free state in India, and is still frequently invoked by Modi.  

All this underscores the commercial dimension of India-China ties, a narrative that suits India, since it glosses over border disputes and regional competition, and reinforces Modi's twin foreign policy priorities of development and regionalism. From inviting the leaders of the South Asian Association for Regional Cooperation (SAARC) countries to his inauguration, to visiting Bhutan and Nepal, to resolving a maritime border dispute with Bangladesh, Modi has given admirably sustained and high-level attention to the India's periphery. This is something the previous government valued in theory but neglected in practice. Modi also decided to visit Tokyo (in September) before Washington (later this month), emphasising that his engagement with Asia would be paramount.

More specifically, the lure of future Chinese investment, a purported US$100 billion over the next five years and 'thrice the investments committed by Japan' during Modi's recent trip to Tokyo, has considerable value and little political downside (notwithstanding Nitin Pai's measured warning that Beijing seeks to use such investments as carrots and sticks). All this is couched in Modi's own cringeworthy neologisms. [fold]

The commercial narrative also suits China, which has been selling its proposal for a 'maritime silk road', a high profile but nebulous initiative to recreate a historic Chinese trade route through the Indian Ocean by developing maritime infrastructure and setting up free trade zones. During a visit to India last week, I found that most Indians continued to be baffled by the whole idea and slightly irked at China's reluctance to provide more details. One Indian naval officer has suggested that the scheme is a way for China to 'soften' and re-brand the much-maligned 'string of pearls', and the director of India's National Maritime Foundation has dismissed it as 'essentially a Chinese ploy'.

It was therefore unfortunate timing that the Maldives, which Xi also visited this week, decided to hand to a Chinese a firm a US$500 million infrastructure project which had earlier been in Indian hands. India's imperative for regional connectivity and inward investment clash with its suspicion of China's long-term intentions. This is a structural problem that transcends Modi and Xi, and it will continue to give Sino-Indian commercial ties an awkward, tense edge. This is something that is obviously absent in the official pronouncements but more than visible in any Indian newspaper. Full-throated Indian endorsement of the maritime silk road is therefore unlikely, particularly as India appears to be scrambling to turn an old cultural project for the Indian Ocean, Project Mausam (meaning 'Season'), into a copycat initiative

More broadly, Xi's visit also has to be seen in the context of Modi's engagement with both Australia and Japan, both US allies concerned about the implications of growing Chinese power and assertiveness.

Modi signed a long-awaited and landmark civil nuclear agreement with Australia, dissected by Rory Medcalf and Danielle Rajendram last week. Although he could not finalise a similar deal with Japan, his visit to Tokyo did yield progress on the bilateral defence relationship, including a Japanese sale (and possible co-production) of the US-2 amphibious aircraft. In recent weeks, Modi's government has also been hyperactively leaking that India is in the 'advanced stages' of talks with Vietnam over the sale of the supersonic BrahMos cruise missile, which has been jointly produced with Russia. India and Vietnam, which the (ceremonial) Indian president is currently visiting, also signed a pointed statement on freedom of navigation in the South China Sea only yesterday

India is therefore fostering a web of commercial and military ties across the region, the sort of 'middle power coalitions' that Rory Medcalf and Raja Mohan have described in their recent paper, while prioritising economic interaction, avoiding the language of containment or even balancing, and resisting 'a bloc-based Asian order with alliances and counter-alliances'. These relationships don't just strengthen India's regional influence; they also force China to court India more intensively, as it did in the decade after the US-India rapprochement. The trick is in getting the balance right, diversifying and upgrading India's Asian relationships as much as possible without provoking a Chinese reaction or getting dragged into others' disputes. 

On the whole, this points to continuity. It is notable, for instance, that after years of condemning the Congress-led Government for pusillanimity in the face of Chinese border incursions, this Government has acted identically, resolving the latest reported incursion, last week, at the usual tactical level rather than escalating the problem. Modi is fine-tuning Indian foreign policy, not recasting it.

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