President Xi Jinping’s India visit: Expectations and Outcomes

The recent visit of Chinese President Xi Jinping to India raised much expectation amongst the Indian people. It was Mr. Xi’s first India trip since he assumed the post of President after the Narendra Modi-led government came to power in May 2014. There was also much in the background of this rather short visit: the new Indian government came to power on the slogans of development and prosperity, Indian leadership has taken to a proactive diplomatic policy, and on one hand, Prime Minister Modi’s first three foreign visits -- to Bhutan, Nepal and most importantly to Japan -- had one or other China element to them, on the other hand, multilaterally, China and India seem to have developed a shared understanding in BRICS and BASIC forums. Both countries have also held dialogues on the future of Afghanistan’s security situation.

As expected, with the Chinese President’s three-day visit, Indo-China relations seem to have reentered a phase of stability after nearly five years of uncertainty revolving around the issues of stapled visas, denial of visas, and recurrent incursions at the border. The distrust between the two neighbours peaked during the Depsang incursion and occupation of Indian territories by China’s People’s Liberation Army (PLA) in the summer of 2013. However, the fact that the Chinese Premier’s visit in the aftermath of the Depsang incursion went ahead as scheduled showed that much political will exists to take the relationship forward. Since then, there has only been a positive momentum. India and China also celebrated the sixtieth anniversary of the Panchsheel agreement along with Myanmar earlier this year. Importantly. President Xi’s visit was expected to translate the political goodwill into deeper engagement on the economic front.

Much like in India, President Xi Jinping has promised deeper reforms, better distribution of incomes and wealth to counter inequality, better control, and better control of corruption at home. Chinese scholars argue that three Chinas exist within one: megacities like Beijing and Shanghai, smaller towns, and villages that lack basic amenities. The new leadership has focused on bridging this gap and sees its new Asian regional policy as an extension of the domestic policy of spreading prosperity and wealth. Xi Jinping has also envisioned an alternative Asian security and economic cooperation architecture. At the Conference on Interaction and Confidence Building Measures in Asia (CICA) held in May 2014, Xi said that Asia needed to “focus on development, actively improve people's lives and narrow down the wealth gap to cement the foundation of security”. To do this, China has proposed the Maritime Silk Route (MSR) and the revival of the land-based Silk Route, based on the idea of one belt, one route. China aims to improve connectivity, trade, and faster movement of goods across South and Southeast Asia by using the MSR. Xi has often proposed the development of a common, comprehensive, cooperative and sustainable security environment to tackle the rising challenges facing the region. MSR is proposed to be one of the ways of achieving these objectives. MSR will also be the avenue for China’s plans to invest $500 billion abroad out of its currency reserve of $3 trillion.

However, India is concerned about the strategic implications of China’s expanding role in Asia. Undoubtedly, China is a rising power and wants other Asian countries to recognize its status as such. China has often stated in the recent past that it intends to expand its role as a provider of common goods in Asia. This implies that China wants to be more active in areas like Humanitarian and Disaster Relief (HADR), anti-piracy operations, stress calls at sea, oil spills and other such incidents. This also means that one has to accept more Chinese presence in the waters of the South China Sea, Malacca Straits, and the Indian Ocean, where China’s economic and strategic interests are expanding.

It is important to note that even as Xi avoided stopping in Pakistan, as is customary for Chinese leaders to do after visiting India, he visited Sri Lanka and became the first Chinese President. This speaks volumes about the importance China attaches to Sri Lanka. The Island country is a destination for Chinese investments and, in many ways, an important cog in China’s future plans in South Asia. India will be watching this relationship closely.

In India, China is seen with a mix of awe and trepidation. Its rapid economic growth notwithstanding, unsettled border and territorial claims, trade imbalance and China’s approach to Pakistan and terrorism in South Asia creates negative emotions. While the border talks have progressed steadily, incidents of incursions do not do well to support the positive political momentum. During his visit, President Xi Jinping was expected to announce investment plans worth $100 billion in India, ranging from railways to textiles to roads and heavy industries. However, it was settled that the Chinese companies will now invest only $20 billion in the next five years as per the agreements signed during this visit.

However, during this visit, India and China worked towards expanding their economic engagement further. This was reflected by President Xi bringing along a delegation of 135 CEOs of various Chinese companies. It was agreed that China would set up two industrial parks in India, one in Gujarat and another in Maharashtra. A few sister-city and province agreements were signed as well. China will play a role in developing high-speed railways in India, and the first project will focus on upgrading some of the existing railway lines and stations in India. Initiating a dialogue on civil nuclear cooperation agreement can also be considered a big step. Space cooperation is also likely to emerge per one of the agreements signed during this visit.

Prime Minister Modi rightly put India's concerns on the prickly issue of the border problem on the table. He pointed out the pattern of border incidents even as high-level visits from China to India were underway. He also said that even when the border issue was relatively small, it had worked to derail the momentum of India-China relations. Both sides have also agreed to work towards reducing the trade imbalance in the next five years through Chinese investments in India and by facilitating access for Indian businesses, including pharmaceuticals, agriculture and fuels. China pledged to support India’s membership in the SCO, while India agreed to work on BCIM. There was, however, no firm commitment from India on the MSR, as India is likely to wait until the blueprints of the plan are put on the table.

India remains an important missing link in China’s outreach efforts across Asia. If China’s MSR and other such engagement strategies are to be successful, China needs India on its side. Therefore, China has made various efforts to ensure peace in the wake of President Xi's very important visit. For example, Chinese media was cautious in interpreting Prime Minister Modi’s visit to Japan and called it part of India’s economic outreach and Japan’s strategic intent, thereby putting all the negativity in Japan’s basket.

Overall, if Chinese investments come through as proposed and if the ongoing political momentum continues unabated, President Xi Jinping’s visit could well alter the paradigms of India-China relations in the future. However, China’s reaction to Prime Minister Modi's firm language on the border issue will become clearer only in the days to come.