Capping off a series of foreign visits at the end his first year in power, PM Modi will arrive in China for what is considered the biggest test for the BJP-led government's foreign policy.
In the past year, India's foreign policy has been re-invigorated with greater attention being paid to immediate neighbours. Now it is China's turn.
China and India share a 4057 km land boundary and are the two largest economies in Asia, accounting for almost 40% of the world's population. Though relations between the two neighbours have been marked by periodic flash points, including war, ties have remained stunted. Over the last decade Sino-Indian bilateral relations have been focused on maintaining the status quo and improving trade ties. Both nations have made efforts to avoid aggravation of the unresolved border issues along India's north-eastern sector.
Under the Manmohan Singh government, the volume of trade between India and China increased, however the balance of trade continues to tilt in China's favour. This is primarily because India's exports to China consist of metal ores and raw materials, while our imports from China include computer terminals, communication hardware, electrical equipment and other finished products. Last year, China became India's largest trading partner.
| Year | Exports to China ($ Bn) | Imports from China ($ Bn) | Trade Deficit ($ Bn) | Chinese Investments in India ($ Mn) | Indian Investments in China ($ Mn) |
|---|---|---|---|---|---|
| 2010 | 14.58 | 42.46 | -26.67 | 33 | 55 |
| 2011 | 16.54 | 52.83 | -36.28 | 95.9 | 42.17 |
| 2012 | 14.87 | 51.88 | -37.01 | 154 | 44 |
| 2013 | 14.5 | 51.38 | -36.88 | 2763 | 50.75 |
| 2014 | 11.98 | 58.27 | -46.29 | 243 | 564 |
(Source: Indian Embassy, China)
In a reciprocal gesture, Modi’s first stop will be Xian, in President Xi Jinping's home province Shaanxi in Central China. Modi will then travel to Beijing to sign various bilateral agreements and move on to Shanghai. In Shanghai, he will attend the India-China Business Forum that will host the CEOs of various Chinese companies in a bid to secure inward investments. Modi will also inaugurate China's first Yoga college in Yunan University and the first Gandhian Studies Institute in Fudan University. There is also likely to be increased collaboration between India and China in the entertainment industry. “Kung Fu Yoga”, a movie starring Jackie Chan is already under joint production between Viacom 18 India and China's Taihe Entertainment Corp.
In recent weeks, the Chinese have been hinting at expanding the areas of co-operation with India. After the change of guard in Sri Lanka, China is likely to push for greater co-operation with India in the Indian Ocean Region. The Chinese recently proposed the joint exploration of the Indian Ocean region for rare minerals. India and China are both contractors with the International Seabed Authority and the move may help India in procuring expensive “rare earth metals”, a crucial component in many strategic and defence technologies. Sameer Patil, Associate National Security Fellow at Gateway House, an Indian foreign policy think tank states that “Both countries have been exploring avenues for maritime co-operation and if they agree for co-operation in this field, that will be a big step forward.” The Chinese are also pushing for the Delhi Chennai rail connectivity project, a $36 billion bullet train project, which they are eager to invest in.
No visible progress can be expected on border dispute resolution during Prime Minister Narendra Modi’s visit to China even though political leadership on both sides has emphasised its expeditious resolution. India’s national security advisors and China’s state councilors have had eighteen rounds of special representative-level talks since 2003.
While all this is on the cards, the question is whether the contentious issue of the disputed territory in Arunachal Pradesh will be addressed this time around. In 2003, the 14th Dalai Lama, who remains in exile in India's northern state of Himachal Pradesh, stated that Tawang, a district in Arunachal Pradesh, has been an integral part of Tibet prior to the Simla accord of 1913. He withdrew his comments later and restated his position in 2008; however the disagreement on the Simla accord has been the primary reason behind this long standing issue. The last time the border issue flared up coincided with President Xi Jinping's visit to India and lasted almost 12 days, indicative of China's unrelenting stance on the region. India's recent decision to improve infrastructure and boost capabilities along the Sino-Indian border is indicative of the fact that the border issue is unlikely to be resolved.
Speaking about the border issues, Patil from Gateway House states, “No visible progress can be expected on border dispute resolution during Prime Minister Narendra Modi’s visit to China even though political leadership on both sides has emphasised its expeditious resolution. India’s national security advisors and China’s state councilors have had eighteen rounds of special representative-level talks since 2003. These negotiations have led to agreements outlining the parameters for resolving the border dispute.” He also adds that, “Due to repeated border incursions by the Chinese PLA troops, border management has become the focus of these negotiations, rather than border dispute resolution. I don’t see the construction and upgrading of border infrastructure on the Line of Actual Control as symbolic of this lack of progress. It is rather to match border infrastructure on China’s side.”
China has staked claim to 90,000 sq km of area in Arunachal Pradesh and 38,000 sq km of area in Aksai Chin. The fact that Pakistan ceded 5,180 sq km of land to China in Pakistan occupied Kashmir as part of the Pakistan-China boundary agreement of 1963, further complicated matters. During his visit to Pakistan, this year Chinese President Xi Jinping announced a $46 billion project to create an economic corridor that runs through this area. Though India raised concerns on the matter, it is unlikely that China will rethink this.
Pakistan has been China's largest defence importer. Over the years China has helped build Pakistan's conventional military capabilities by supplying parts and systems including F-22P frigates with helicopters, K-8 jet trainers, F-7 fighter aircraft, battle tank production, air-to-air missiles, and anti-ship cruise missiles. China has also agreed to sell 8 conventional submarines to Pakistan, adding to the Indo-Pak military tension. China is also the largest arms supplier to the sub-saharan African region and is among the largest suppliers of arms to the South Asian region.
China's official defence budget has been growing at a consistent rate over the years and rose last year to over $130 billion. In comparison, India's defence budget for last year stood at $38 billion, and while India does not share China's diverse regional threat perceptions, India's intention to become a net security provider in the Indian Ocean would require a more competitive budget. According to a Pentagon report released earlier this week, China's military budget grew at an average of 9.5 per cent per year from 2005 through 2014, and China will probably sustain defence spending growth at comparable levels for the foreseeable future.
In May 2014, President Xi Jinping mooted a “Code of Conduct for Asia”, in light of the US re-balance to the Asia Pacific. In what could be considered a veiled threat, President Xi said: “To beef up an entrenched or military alliance targeted at a third party is not conducive to maintaining common security.” India forms a key component of the US re-balance strategy to the Asia Pacific. In the weeks leading up to Modi's visit, the Pentagon released alarming reports about increased Chinese military aggression and the threats it poses to the region.
Modi's growing proximity to Uncle Sam has played a significant role in exacerbating military tensions between India and China. The Chinese issued an official statement condemning the Pentagon reports, urging Washington to take a more balanced view of Chinese activities in region. Most of India's recent defence pacts (US, Japan, Vietnam) and agreements can be seen as a direct counter to Chinese aggression in the region. While these agreements have helped India assert its dominance in the South Asian and Indian Ocean regions, they have done little to improve India's position for oil and mineral exploration in the South China Sea.
Prime Minister Narendra Modi's visit is likely to continue the same soft power push with China as he has done with most other countries he has visited. Several reports have pointed out that on each of his foreign visits, Modi has mentioned China in his speeches. His surprise entrance into Weibo, the Chinese Twitter equivalent, is indicative of his usual media powered public diplomacy. While several new economic and cultural agreements are likely to be signed, no significant progress is expected on resolving security related issues. Irrespective of the outcome, the visit will be a defining moment in the new government’s approach to India's foreign policy.