Indian PM Modi Seeks Chinese Investment

Indian Premier Narendra Modi and Chinese President Xi Jinping are seeking to increase bilateral economic cooperation. But the border dispute between the two powerful Asian nations might get in the way.

Chinese President Xi Jinping is visiting New Delhi on Wednesday, September 17. The two Asian countries have different political systems, and the economic and militaristic gulf between them is also huge. Despite the fact that the Sino-Indian border dispute remains unresolved, the leaders of the two countries are still looking for an increased bilateral cooperation.



After the war between China and India in 1962, it took a quarter of a century until the visit of former Indian Prime Minster Rajiv Gandhi to Beijing somewhat eased the tensions. However, in 1998, a few days before India carried out three nuclear tests, the then Minister of Defence George Fernandes said: "China, not Pakistan, is the biggest threat to India."



Economic cooperation



But for quite some time, China has been India's biggest trading partner, with the trade surplus clearly favoring Beijing. Both sides are interested in enhancing their economic partnership. New Delhi needs investment in its infrastructure - Prime Minister Narendra Modi has already made the modernization of the Indian railway his priority. The premier is expecting the Chinese investment to help build the country's first high-speed rail connecting Bangalore in the east to Chennai and Mumbai in the northwest.



Beijing is also expected to finance two industrial parks in the Indian states of Gujarat and Maharashtra, which would increase the opportunities for Indian exports and jobs.



The 'Japan card'



Japanese PM Shinzo Abe also pledged support of around 35 billion USD to India during his visit to New Delhi earlier this month. The Indian government wants to import the "bullet train" technology from Japan.



Does Modi believe that by moving closer to Japan, which has territorial disputes with China in the East China Sea, he would be able get concessions from Beijing? "India has no 'Japan card' against China," Sujit Dutta, China expert at the New Delhi-based Nelson Mandela Centre For Peace and Conflict Resolution, told DW.



"Modi's administration is very clear that the relationship with Japan is crucial since Tokyo is a leader in technology and India is keen to expand its relationship with Japan in this area," the analyst explains. Dutta also says that India's ties with Japan and China have different dynamics and that the one will not be forged at the cost of the other.



According to Zhao Gancheng from the Shanghai Institutes for International Studies (SIIS), it is "hardly imaginable" that Modi will allow himself to be led by Japan against China. However, he acknowledges that the relationship between Tokyo and Beijing "is as bad as it has been for a very long time," says Zhao. The expert also says that it is understandable that Abe wants to interfere and provoke China. "But PM Abe will not be successful because India has its own interests and its own goals," Zhao told DW.



Chinese investments not guaranteed



Indian and Chinese analysts are of the view that New Delhi's and Beijing's economic goals are similar. "Modi was already considered a great friend of China's when he was chief minister of the state of Gurajat - he visited Beijing a number of times, Chinese companies invested in Gujarat, which resulted in an economic boom in the state," Christian Wagner, a South Asia expert at the German Institute for International and Security Affairs (SWP), told DW. "China is a very much interested in increasing its investments in India and Modi also wants to explore that option," he says.



At the same, there is a resistance in India against increased cooperation with Beijing, says Wagner: "China has wanted to invest massively in India's infrastructure for many years – not only in railways but also in ports and telecommunications. The Chinese investors want to go into India but they also want security guarantees, which is why these projects are met with serious reservations in India and also in Modi's own party, the BJP."



Unresolved border dispute



That's where the unresolved border dispute comes into play: New Delhi claims Aksai Chin, an area controlled by China, whereas Beijing lays claims on large parts of the Indian state of Arunachal Pradesh.



"The border conflict has been a test for bilateral relations," says Wagner. "With the economic progress, it could be possible to put aside the dispute though. However, it can also lead to tensions between the two countries," he adds.