Modi-Xi Jin Ping Personal Chemistry to help in improving Indo-China relations

India and China are today the most sought after countries not only for business but for geopolitical reasons for maintaining a conflict free world replete with global peace. So India’s outreach programme to China with Prime Minister Narendra Modi enjoying personally great chemistry with China’s unquestionable leader after the recent polit bureau meeting Xi Jin Ping Is a significant development.

Prime Minister Modi ‘s one on one meeting with China’s supremo Xi Jin Ping at SCO in
China had a lot of public and hidden agenda for mutual benefit for both countries. Though the border line up on the Dokhlam issue and the OBOR still came in the way of Sino Indian relations going to higher levels, there seem to be more important geo political and trade issues to contend with.

With US President Donald Trump wooing North Korean leader Kim Jong Un at Singapore with the objective of de-nuclearisation of North Korea, removing the fears of its ally South Korea, and the nightmare of Pentagon that nuclear war heads are directed from Pyong Yang  at Washington and New York, there is a lot happening geo-politically. Diplomatic observers see India United States China and Singapore form an axis power for geo political stability in the region besides ensuring a favourable trade balance for all of them.

According to commerce ministry sources India has unfavourable balance of trade with China with balance of payments amounting to US$ 6 billion in Chinas favour. India’s open door trade police, cutting red tape, have resulted in Japanese, South Korean and Chinese industry dominating Indian industry at a time when Indian manufacturing is at the lowest ebb.

Most Indian companies especially power companies buy steel from China which is overloaded with inventory pileup due to a global slowdown and lack of demand and India gets discounts as compared to European or American firms. South Korea dominates the automobile industry as also the electronics and white goods industry competing with Japan for space. China has flooded the Indian markets with an array of products from toys, to electronic goods to white goods. Even the firecrackers for Diwali and the Ganesh and Laxmi idols made with precision come from china.

Now coming to the meeting between Prime Minister Narendra Modi and Chinese president Xi Jin Ping at Wuhan last weekend on Chinese soil is claimed to be the first for Xi in China, where the focus ostensibly was not on specific issues, but broad, discussions on an array of subjects. Diplomatic sources claim both leaders wanted to have this meeting.


China is very optimistic of the Xing Ping Modi meet and claims SCO summit played positive role in bilateral cooperation with India

Reports from Beijing claim that Chinahas presented an upbeat picture of the talks between Prime Minister Narendra Modi and President Xi Jin Ping at Qingdao, saying they agreed to “cherish” the “positive momentum” generated by their Wuhan meeting and implement the “important consensus” reached at the summit.

Modi and Xi, on 9 June held talks on the side-lines of the Shanghai Cooperation Organisation (SCO) summit in the port city of Qingdao. The meeting covered key aspects of the bilateral engagement, reflecting the resolve by the two countries to reset relations and bring back trust in their ties, hit by the Doklam standoff and several other thorny issues, a PTI report said.

Chinese Foreign Ministry spokesman Geng Shuang during a media briefing in Beijing on Monday said, “The two leaders exchanged views on bilateral relations and issues of mutual interests. They also reached important consensus.

“Both leaders believe that their informal summit in Wuhan played a positive role in moving forward the bilateral cooperation,” he said, responding a question on Modi-Xi meeting on the side-lines of the just-concluded Qingdao summit of the SCO. “They agreed that that the positive momentum should be cherished and they should implement the consensus reached in Wuhan,” Geng said.

They agreed to implement the consensus in areas of strategic communication and expanding people to people cooperation and move forward bilateral ties. The meeting was held in cordial atmosphere just like the Wuhan informal summit and it will surely contribute to the sound development of bilateral ties.  The two sides also agreed to have high-level exchanges, formulate new trade goals and establish high-level people to people exchanges led by the two foreign ministries;Geng is quoted by PTI as saying.

Geng highlighted India’s decision to expedite approval procedures for the Bank of China’s request to set up a branch in Mumbai and agreements on exporting India’s rice to China and sharing of hydrological data by Beijing with New Delhi.

During the meeting, Xi and Modi agreed to hold the next informal summit in India in 2019 besides resolving to continue efforts to ensure peace and tranquillity along the border.

On the outcome of the SCO summit, Geng said it “breathed new life to the Shanghai sprit, which is mutual respect which is mutual benefit, equality consultation, respect for diverse civilisations and pursuit of common development.”

“In the past 17 years the SCO has been growing. This is attributed in the final analysis to the fact that the Shanghai spirit transcended the out-dated concepts of clash of civilisations, cold war the mind-set. SCO pursues no isolated and exclusive clubs. The summit has established new action plan. The leaders signed and approved 17 documents, six cooperation documents, more than any previous summits of the SCO. The summit also achieved concrete outcomes and made plans for promoting good neighbourliness and friendship, combating three evil forces of separatism, extremism and terrorism, Geng is quoted as saying.

“To implement this consensus is our priority task for the next phase. As founding member China regards SCO as a priority of its diplomacy. We will work with all member states to implement this consensus and make the SCO more efficient and stronger with brighter prospects,” he said.

Sino Indian Trade

Lets look at the trade scenario between India and China and how both sides are trying to achieve a balance of trade and payments.  The India-China bilateral trade reached $84.44 billion last year, an historic high notwithstanding bilateral tensions over a host of issues including the Doklamstandoff, official figures available say.

A PTI report from Beijing claimed that a rare novelty of the bilateral trade,otherwise dominated by the Chinese exports, was about 40 per cent increase of Indian exports to China in 2017 totalling to $16.34 billion, as per data of the Chinese General Administration of Customs. The bilateral trade in 2017 rose by 18.63 per cent year-on-year to reach $84.44 billion. It is regarded as a landmark as the volume of bilateral trade for the first time touched $80 billion, well above the $71.18 billion registered last year.

Sino-Indian trade touched a historic high,  despite bilateral tensions over a number of issues including the China-Pakistan Economic Corridor, China blocking India’s efforts to bring about a UN ban on Jaish-e-Mohammad leader Masood Azhar, Beijing blocking India’s entry into the Nuclear Suppliers group.  The bilateral trade stagnated around $70 billion for several years, the target was set at 100 billions.

Though it is still about $20 billion short, officials on both sides expect trade and Chinese investments in India to pick up further this year as both the governments are trying to scale down tensions and step-up the normalisation process.

Since the SCO summit in China the new commerce minister of China is to visit India in the coming weeks for talks to improve bilateral trade. While the bilateral trade reached a new landmark, the trade deficit too continues to remain high at $51.75 billion – registering a growth of 8.55 per cent year-on-year in 2017.

According to India’s trade figures, the deficit had crossed $52 billion last year. India has been pressing China to open the IT and Pharmaceutical sectors for Indian firms to reduce the massive trade deficit. As per the Chinese trade data, India’s exports to China increased by 39.11 per cent year-on-year to $16.34 billion last year. India’s imports from China increased by 14.59 per cent to $68.10 billion.

Trade circles claim that India has emerged as the seventh largest export destination for Chinese products, and the 24th largest exporter to China.Significantly, diamonds along with copper, iron ore, organic chemicals and cotton yarn contributed to the increase Indian exports to China.

India’s exports of diamonds grew 4.93 per cent totalling to $2.59 billion. India was the second largest exporter of diamonds to China with a market share of 33.06 per cent after South Africa.Also, Indian exports of copper registered a significant increase of 115.78 per cent to reach $2.15 billion.India’s cotton including yarn and woven fabric exports to China showed an increase of 1.86 per cent to reach $1.30 billion. India was the second largest exporter of cotton to China with 15.04 per cent market share last year.

India’s exports of Zinc to China showed a sharp increase of 802 per cent to reach $240 million.China’s exports on the other hand were dominated by electrical machinery and equipment registering an increase of 28.23 percent.


T N Ashok is a Corporate Consultant, Resident Editor and Writer of Economic Affairs.