The Modi-Xi Summit and China-India Relations

Tomorrow, Chinese President Xi Jinping will travel to India for a three-day visit to meet with Indian Prime Minister Narendra Modi and others there in government and business. The bilateral environment for this trip is better than last year when Chinese Prime Minister Li Keqiang went to India a few weeks after a border standoff and former Prime Minister Manmohan Singh traveled to Beijing in his last few months in office. Mr. Xi’s visit is part of what have been three-plus months of intense Indian activity in the foreign policy realm since Mr. Modi took office in May. It comes a couple of weeks after the Indian prime minister’s visit to Japan and the Australian prime minister’s trip to India, just after the Indian president visited Vietnam, and less than two weeks before Mr. Modi meets with U.S. President Barack Obama in Washington. The Chinese president’s visit, in particular, involves a country that poses both an opportunity and a challenge for the Modi government. As a result of this, and the fact that the state of China-India relations can potentially affect the situation in Asia and beyond, this visit is being watched closely. This piece looks at where the China-India relationship stands, the backdrop of the Xi visit, what the two sides will be looking for and trying to signal, the trip agenda, as well as what all this means for the United States.

The Context: The Relationship

Recently, the Indian foreign minister frankly noted that India’s relations with China were currently “good,” but involved both “competition and cooperation.” Arguably, there is also a potential for conflict. The cooperative elements of the relationship include a burgeoning economic relationship, greater dialogue on issues like Afghanistan and counterterrorism, as well as cooperation in multilateral forums, including BRICS (Brazil, Russia, India, China and South Africa) and on multilateral issues such as climate change.

The competitive and conflictual elements that will hang over Mr. Xi’s visit include the long-standing boundary dispute between the two countries, China’s concerns about the presence of the Dalai Lama and other Tibetan leaders in India, as well as India’s concerns about Chinese dam construction on its side of the Brahmaputra river and cyber-espionage and cyber-security threats. Each country also has broader concerns about the other’s relationships with third countries. In China’s case, India’s developing relationships with countries in the Asia-Pacific, especially Japan and the U.S., and perhaps Australia and Vietnam. In India’s case, particularly China’s relationship with Pakistan, but also its overtures to India’s smaller neighbors and Beijing’s increasing interest in playing a role in the Indian Ocean region.

In addition, the very issue that was supposed to bind the two countries—economic ties—has been a source of trouble. Bilateral trade has actually fallen over the last few years from $74 billion in 2011 to about $65 billion in 2013. From India’s perspective, what’s also been problematic is its growing trade deficit with China ($31 billion in 2013). Furthermore, bilateral investment has remained limited, with both sides complaining about market access in the other country.

The Backdrop: A New Government in Delhi; A Beijing Looking for Partners

None of these problems is new, but what is new is the government in Delhi. The majority government in India—the first of its kind in two and a half decades—is led by someone who is no stranger to China. Mr. Modi traveled there when he was chief minister of the state of Gujarat in order to seek investments and markets for his state and its companies. In the past, he has expressed concern about China on the security front. However, he has also stated his admiration for its economic achievements and a desire to do business with that country, especially in order to deliver on his campaign promises of growth and development. Mr. Xi’s visit thus offers an opportunity to attract Chinese investment, as well as elevate India’s role on the world stage. Furthermore, there will be an underlying hope that the visit (and other recent ones) will encourage competitive courting by the U.S.

Chinese officials, in turn, welcomed Mr. Modi’s election, emphasizing that they were ready to work with someone they see as a business-minded leader. The first senior official to visit India from the P-5 was indeed the Chinese foreign minister, sent as Mr. Xi’s special envoy. For Mr. Xi, his own visit offers an opportunity to establish a relationship with the new Indian government and especially Mr. Modi. A stable relationship with India could ease pressure on one of China’s borders. Furthermore, a good relationship could limit how far Delhi takes things with Tokyo and Washington. Mr. Xi’s task, at least on this visit, has been made easier by the fact that he postponed his visit to Pakistan. But he will be cognizant of the fact that he is not the only one wooing India right now, and not the only country that India, on its part, is wooing. Moreover, in the outgoing Indian visits to Japan and Vietnam, China was a publicly unspoken theme and it’ll likely be so when Mr. Modi visits the U.S. later this month.

Mr. Xi’s Visit

These and other issues provide the backdrop to Mr. Xi’s visit and in some cases will be agenda items. Economic issues will be a key focus of the visit. The Chinese government is aware that an imbalanced economic relationship poses a problem for broader ties and is not sustainable, not least because Mr. Modi stressed this point when he met Mr. Xi on the sidelines of the BRICS summit in Brazil. It is also an issue the Indian commerce minister discussed with her Chinese counterparts recently in Beijing. Chinese officials have noted that in order to help address this imbalance, Mr. Xi will take with him investment commitments of over $100 billion over five years. They have suggested that these will especially be targeted towards the infrastructure and manufacturing sectors, which are focus areas for Mr. Modi, and will likely involve the establishment of industrial parks, including one in Mr. Modi’s home state. Offers of more Chinese financing for Indian companies are also likely to be on the table. Mr. Xi is also likely to seek Indian participation in Chinese initiatives for regional connectivity, an offer that India will likely consider but not to the exclusion of other such initiatives.

The economic component of the relationship is likely to be one of the main points of focus during Mr. Xi’s first stop in Ahmedabad in Gujarat. This leg of the visit will also give Chinese officials a chance to highlight that the bilateral relationship does not just involve the central governments in both countries, but also states and businesses. Overall, the economic dimension is also providing Mr. Xi’s government a way to try to one-up Japan, with the Chinese consul general explicitly comparing China’s potential economic offers to the recent Japanese commitment of $35 billion over seven years.

Some believe that this moment also offers an opportunity for the two countries to move ahead on border talks, especially transitioning from managing the dispute to trying to solve it. Indeed, a former Indian foreign secretary has urged the Indian government to press this issue at what he sees is an advantageous time when China is courting India. During Mr. Xi’s visit, we might see the announcement of the next step on this front.

In addition, there will likely be discussion of a number of global and regional issues, not least the situation in Afghanistan, as well as the Middle East.

This visit, however, is not just about substance, but also about style. Just as Mr. Li did last year, Mr. Xi has been trying to use this visit to (a) signal that China considers India to be important and (b) add a personal dimension to the relationship. An underlying irritant for many in India has been the sense that Beijing has, at best, treated India as irrelevant or peripheral and, at worst, been trying to contain India or prevent India’s rise—not least through China’s support of Pakistan, as well as its reluctance to endorse a permanent seat for India on the U.N. Security Council and past objections to Indian membership in the Nuclear Suppliers Group (NSG). In the lead up to the visit, Chinese policymakers have tried to mitigate some of these concerns, indicating support for India’s membership in the Shanghai Cooperation Organization and inviting Mr. Modi to the Asia-Pacific Economic Cooperation meeting in Beijing. One thing to watch during Mr. Xi’s visit is whether China will take further steps on this front—even if just rhetorical.

On his part, Mr. Modi is going out of his way for Mr. Xi in some respects, sending his national security advisor as his special envoy to Beijing to, among other things, stress the importance the government is placing on the visit. More significantly, he is making a “special gesture,” possibly against the advice of a number of his diplomats, since it is a departure from Indian protocol, to greet Mr. Xi in Ahmedabad.

While the Chinese president perhaps can’t compete with the personal relationship that Japanese Prime Minister Shinzo Abe has established with Mr. Modi over the last many years, Mr. Xi has tried to inject a personal dimension, saying that when he first met Mr. Modi he “felt like meeting an old friend.” He is also travelling first to the prime minister’s home state, and will visit the Sabarmati Ashram that is linked to Mahatma Gandhi and India’s struggle for independence.

The Chinese president has tried to emphasize the commonalities not just between the two countries, but particularly between the tasks that lie ahead for Mr. Modi and him. There are indeed commonalities between Mr. Modi and Mr. Xi, two Asian leaders that have tried to emphasize that they will take “strong economy, strong security” approaches. Yet the contrast in terms of how the two leaders came to be in power couldn’t be more different: one was elected democratically; the other was selected by a chosen few. As Dhruva Jaishankar of the German Marshall Fund has noted, the disparity in their backgrounds is also striking: one, a former tea seller; the other, a prince-ling.

Challenges and Questions

For this visit and beyond, challenges and questions lie ahead for the China-India relationship.

There are open questions with regard to China, including: How much can and will Mr. Xi do to assuage Indian concerns, particularly on the border and Pakistan? How will China react if the Modi government follows through with its plans for military modernization, border infrastructure upgradation and the development of India’s northeast? What will Beijing do with regard to Tibet, particularly in the event of a transition in Tibetan leadership?

There are also a number of questions with regard to the Indian government:

Can Mr. Modi deliver domestically? A common challenge to all India’s key relationships is that they are both motivated by and dependent on domestic transformation in India, especially on the economic side. Chinese capital, companies and attention will come to India if Mr. Modi’s government is seen as delivering on his promises of growth, governance and getting things done. If there is a sense that he can’t deliver, they might lose interest.

What happens if and when there’s a crisis or if China crosses an Indian red line? We haven’t seen major Sino-Indian tension or setbacks since Mr. Modi took over, but we have seen in his government’s approach to Pakistan that its reaching out is contingent on a sense that the other country is acting in good faith. But the relationships with China and Pakistan aren’t equivalent, and many will watch to see how Mr. Modi will respond if and when there’s a sense that China hasn’t acted in good faith.

Mr. Modi’s predecessors have found that even minor crises can derail the bilateral relationship or at least result in a two-steps-forward-one-step-back dynamic. This is partly because the Indian media and public are not inclined to give Beijing the benefit of the doubt. There is still a lack of trust in the relationship, especially in India where narratives related to the 1962 Sino-Indian war continue to resonate. There remain questions in India about Chinese intentions, evidenced from the fact that in the press conference to preview Mr. Xi’s visit, the Indian foreign ministry spokesperson found himself fielding skeptical questions about allegations of Chinese border transgressions. This lack of trust is compounded by a lack of (or limited) knowledge of the other on both sides.

Can Mr. Modi’s government walk the China-India tightrope effectively, with the fine balance necessary to reconcile competing interests? The Indian diplomatic corps is no stranger to this challenge and we’ve already seen the new Indian government try to grapple with it. For example, the foreign minister stating that China “should understand and appreciate our sensitivities regarding Arunachal” while the foreign ministry has avoided answering the question of whether Indian minister of state for home affairs Kiren Rijiju (who is from the state of Arunachal Pradesh, which China claims) will attend the dinner for Mr. Xi. Or, the government making clear that the Dalai Lama and Tibetans will continue to be welcome in India while they will likely try to limit Tibetan protests—or at least their visibility—during the Chinese president’s visit.

Mr. Modi has a base, a media and, arguably, a population that tends to be skeptical, if not suspicious, of China. It won’t be lost on Mr. Modi that he’s taking a risk; that some will question the nature of his welcome for the Chinese president, that some will draw comparisons with former Indian Prime Minister Nehru’s embrace of the Chinese leadership before Sino-Indian relations turned sour. But Mr. Modi is likely calculating that the opportunity is worth it and that his “strong” credentials will dampen criticism.

The tag line that the Indian government is propagating is that its foreign policy will have a strong face, a sensitive face and a proactive face. And while the “sensitive” face will perhaps be more visible during Mr. Xi’s visit, the Modi government has also been finding ways to convey that they will neither be push-overs nor hesitate to express Indian concerns, and will speak from a position of strength. Hence, early on, the invitation to Tibetan leader Lobsang Sangay to attend the government’s swearing in. Last week, the Indian foreign minster asserted that her Chinese counterpart has been told, “If we believe in one China policy, you should also believe in one India policy.” In Japan, we’ve seen Mr. Modi criticize those who encroach on others’ lands and seas, and state his preference for countries that emphasize a development-focused rather than an expansionist mindset. While the Indian foreign minister refused to confirm or deny that these were references to China, they only reiterated a sentiment Mr. Modi had explicitly expressed about China in Arunachal Pradesh during the election campaign. The just-concluded Indian presidential visit to Vietnam has, in turn, resulted in a joint communique that expresses support for “freedom of navigation in the East Sea/South China Sea,” with India welcoming the chance to host the Vietnamese prime minister in October and the offer of additional oil and gas blocks for exploration by an Indian state-owned company.

The “strong face” is also being signaled through statements and suggestions that India is politically stronger and will be economically so as well. Furthermore, there is an attempt to convey this by taking on any suggestion that China is India’s superior in civilizational terms—witness Mr. Modi’s statements and tweets on how Buddhism traveled from India to China, a connection that China used to try to downplay. Finally, the government will try to signal this strength through the continued pursuit of a diversification strategy, highlighting that India has options by engaging with a number of countries, including Australia, Japan, Russia, Vietnam and the U.S.

Where Does the U.S. Fit In?

The India-U.S. relationship is partly driven and shaped by the two countries’ perceptions of and relationships with China. Delhi and Washington, therefore, watch closely how the other is interacting with Beijing.

It’s a complex, dynamic triangle. On the one hand, the U.S. would like to see a stable China-India relationship, especially given other tensions in Asia and the world. Furthermore, it won’t necessarily mind if Chinese investment in India leads to a better Indian economy and, particularly, infrastructure that can redound to the benefit of American business as well. On the other hand, the U.S. would not like to see China and India grow too close, China dominate the Indian economy or for the two countries to form a tag team—with Russia possibly in tow as well—in multilateral fora.

Similarly, on the one hand, Indian concerns about a potential G-2 persist—the idea that China and the U.S., which are economically interdependent, will act together in a fashion that will be to India’s detriment. A different manifestation of this concern is the assessment that the U.S. is not a reliable partner vis-à-vis China because it will choose China when push comes to shove. On the other hand, Indian officials don’t want to see Sino-U.S. tensions that might destabilize the entire region, jeopardizing Indian domestic goals.

In addition, the Indian leadership recognizes that American concerns about Chinese intentions and the nature of the Chinese government are partly what make India important to key constituencies in the U.S.—something Delhi finds useful—but it also doesn’t want to be asked to choose between China and the United States. Defense Secretary Hagel indeed recently acknowledged this Indian concern in Delhi.

Another dimension for India is that its officials realize that what is partly driving China’s diplomatic and economic interest in India is its relationship with countries like Japan and the U.S. Thus, India will continue to reach out to these countries bilaterally and even in a trilateral context. Furthermore, even if not explicitly, the U.S. is also considered to be part of India’s strategic insurance policy. The U.S. can help manage China’s rise and assure the kind of Asia that India would like to see. The Indian government does not share what some have outlined as Mr. Xi’s vision of Asia, with China the dominant country and with the U.S. playing a minimal role. The fact that India would like to see a different kind of Asia is reflected in the Tokyo declaration that notes that the responsibility that India and Japan share to shape “the character of this region.” It is also evident in the repeated statements from Indian officials that they would like to see a continued, effective U.S. role in the Asia-Pacific.

While they have various concerns about each other, however, it’s also worth keeping in mind that China, India and the U.S. also share some common concerns—including those related to Afghanistan (and even Pakistan), the Middle East and climate change—and this offers the prospect of cooperation, or at least, consultation in the future.