The Modi Moment for China and India?

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Indian Prime Minister Modi gives a speech, courtesy of Narendra Modi/flickr

This article was originally published June 20, 2014 by Harvard International Review.

When former Indian National Congress (INC) Minister of State Jairam Ramesh coined the term ‘Chindia’ he envisaged a relationship between China and India that was driven by mutually beneficial trade rather than conflict. Today it seems China and India are tipped to become the leading superpowers of the twenty-first century, driving forward the international economy and maintaining peace and prosperity in the Asia-Pacific region.

Both among the fastest growing economies, China and India are the two most populous countries in the world with a great deal of untapped trade potential. Beijing and New Delhi recognize this and will harness it under under Xi Jinping and Narendra Modi’s leadership. Whether the Modi moment becomes the ‘Nixon moment’ for Sino-Indian relations rests heavily on the level of cultural engagement between the two countries.

Last week Chinese foreign minister Wang Yi sat down for a 45-minute meeting with the newly elected Indian Prime Minister, Narendra Modi, marking the first high level visit from a foreign state. This came after a private phone call discussion between Chinese Premier Li Keqiang and Modi on the day of his victory; reportedly, the first call made by a foreign world leader.

On his two-day visit to India, Xi’s Foreign Minister, Wang Yi emphasized the “strong and new wind” sweeping across India, galvanized by the former tea-seller whose political narrative of creating more jobs, boosting the manufacturing sector, and bringing more wealth to India captured the nation’s 1.24 billion people. Modi’s business-oriented agenda contains within it a push to recalibrate China as a key trading partner and friend. Beijing’s warm reaction to Modi’s victory suggests that a strong and new wind is also sweeping across the Sino-Indian border and that China similarly prioritizes a normalization of relations.

China and India’s relationship has not been so rosy in the past and shared historical baggage demonstrates that future engagement will not be plain sailing either. In fact, History warns against the hasty assumption that economics alone will reconcile two warring neighbours.

India and China’s shared 2,100-mile border has caused major border disputes, notably over the issues of Tibet and Pakistan. This culminated in the 1962 Sino-Indian War where India lost strategic points. In the last decade, China has made a concerted push to mitigate tensions, signing the Border Defence Cooperation Agreement (BDCA) last year. Premier Li Keqiang has echoed his predecessor Wen Jiabao’s view that Sino-Indian ties will be the most important bilateral relationship of the 21st century, declaring that as ‘peaceful’ leaders, China and India’s similarities will foster cooperation, peace, and co-prosperity in the region.

Modi and Xi will however continue to advance the narrative of commonality and mutual economic benefit that began under their predecessors. There are huge benefits to be reaped; the current $65 trade volume is tiny compared to the net trade both countries produce. India and China also share complementary economies; China has traditionally excelled in manufacturing and infrastructure but will chose to transition into private enterprise and a consumption-led economy whereas India, strong in services and Information Technology, will transition out into offshore manufacturing exports. Foreign Policy calls this ‘transition out’ an “Indian manufacturing renaissance.”

Modi is indeed opportunely placed to seize the moment. Increased Chinese investment will give India much-needed public infrastructure in the form of roads and railways. Already, China has promised to invest in High speed railway infrastructure and offered to finance 30% of India’s infrastructure development. In return, India provides attractive returns on capital investment and interesting investment opportunities in IT.

But economic convergence is no panacea for military conflict or geopolitical tension. India runs a $40 billion trade deficit with China and many Indian businessmen have observed China’s economic boom with envy. Nationalism in both countries threatens to undermine the relationship. The Chinese State Xinhua News Agency wrote in one article that Modi will bend to China out of economic necessity.

This level of nationalistic arrogance could intensify if China continues to see India as just another economic trading partner. The Chinese have been criticized for its dealings in countries such as Africa, where their extraction of mineral resources has been described as ‘imperialistic.’ Perhaps more damaging for Sino-Indian relations is the long-standing cultural hatred between the two nations. This will negatively impact how businessmen on both sides engage with each other, especially when trust and communication are crucial for business. Commerce, in other words, cannot be solely relied on to achieve rapprochement.

Yet it seems that China recognizes the importance of cultural as well as economic engagement. In an interview with India’s CNN a week ago, Wang acknowledged that China and India need to foster cultural exchange. In a press conference, Wang mentioned Modi’s interest in the 7th century BC Chinese Buddhist traveller Xuan Zang who travelled to Gujarat. Wang declared that there was an agreement to launch a Xuan Zang cultural exchange program . Recently, there has even been talk of Bollywood films going to China. Chinese and Indian leaders should move to promote on-the-ground and sometimes ‘intangible’ cultural interactions by encouraging visas and tourism because they will benefit businessmen, migrant workers, and students in the long-run.

Ramesh recently depicted Modi as India’s Nixon: “Mr Modi in many ways is like Mr Nixon who opened China to America. Modi could become India’s Nixon when it comes to China or Pakistan,” he stated. But in that analogy it is worth recognizing, firstly, that China has changed a lot since 1971 and that it has led much of the push to ‘open’ itself up to India.

Secondly, Nixon himself relied on the cultural engagement already taking place through cultural exchanges, university programs, and language centers; economic incentives alone were therefore not the only push-factor. Rapprochement, in effect, cuts both ways – it is a bottom-up initiative as well as a top-down project. With China and India declaring 2014 as their “Year of Friendship” and President Xi scheduled to visit India later this year, there is a strong sense that both countries are taking administrative steps in that direction, promoting opportunities for citizens to make those valuable friendships.

More broadly speaking, how will this ‘charm offensive’ play out in the long-term? Will India and China fight it out to become leader if India catches up to China’s growth levels and manages to scale back the trade deficit? Again, nationalistic concerns could threaten to aggravate long-standing fears about security and asymmetric trade. Despite the Xinhua News Agency’s claims that the pro-Business Modi will follow China out of economic pragmatism, there is reason to believe that Modi will be more nationalistic about border disputes, and in particular the issue of Tibetan independence.

During his election campaigning in the border state of Arunachal Pradesh, Modi criticized China’s expansionist foreign policy, adhering to the BJP’s generally hardline position towards China, which still considers Arunachal to be ‘South Tibet’. What is more, some Indian officials have interpreted China’s issuance of stapled visas” to border states such as Arunachal Pradesh and Kashmir as an underhanded violation of Indian sovereignty.

Will the Modi moment become the Nixon Moment then, just as Ramesh believes? It will depend on how close China and India will become and whether Modi takes pressure off of Tibet and existing border contentions. It will also depend on how the US reacts to ‘Chindia.’ After all, the US’s intended ‘pivot’ towards the Asia-Pacific will be threatened by China’s success at winning allies through soft power and commerce. Although India will most likely continue to remain neutral in Sino-American tensions, Washington will work hard to preserve American interests in Asia and may yet choose to undermine Chindia.

Alice Han is a regular contributor to Harvard International Review.


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