When Prime Minister Narendra Modi comes face to face with President Xi Jinping on the sidelines of the G20 Summit in Hangzhou on Sunday, striking a pragmatic balance between sharp diplomatic differences and the promise of economic cooperation could drive the agenda for their talks.
Modi will fly to the scenic – if deserted – city of Hangzhou late on Saturday evening from Vietnam, where he signed 12 agreements, including one for extending a $500-million line of credit to the country.
Like India’s border dispute with China, Vietnam too has an ongoing and bitter maritime dispute with China about overlapping claims on islands in the South China Sea.
Differences will, of course, be on Modi’s mind when he meets Xi at the sprawling G20 Summit venue.
The list is long: China taking the lead in blocking India’s bid to enter the Nuclear Suppliers Group, Beijing’s controversial economic corridor with Pakistan that passes through Pakistan-occupied Kashmir and Beijing putting on hold the move for UN sanctions against Jaish-e-Mohammed chief Masood Azhar, the suspected mastermind of the attack on Pathankot airbase.
Bilateral relations dipped after India blamed China for stymieing its bid to become a member of the NSG in June. The two sides also engaged in a war of words over China’s “technical hold” on the move to ban Azhar.
It will not be a surprise if Xi raises India’s recent signing of the Logistics Exchange Memorandum of Agreement (LEMOA) with the US and asks Modi to clarify India’s foreign policy doctrine of non-alignment.
China though is not worried about the pact, a top expert said.
“There is no panic in China over LEMOA. It doesn’t mean US will use Indian bases...China is not worried. China and India relations are not a zero sum game,” Ye Hailin, director of the Centre for South Asian Studies at the elite Chinese Academy of Social Sciences (CASS) told Hindustan Times.
“India will not give up its independent foreign policy. There is no formal military alliance with the US and there is no shift in India’s strategic doctrine.”
Hu Shisheng, South Asia expert at the China Institutes of Contemporary International Relations, said, “Ever since the beginning of this year, there have been new disturbances in our bilateral relations. But I am glad to find that after foreign minister Wang Yi’s visit to India, the situation is stabilising.”
Hu described as a good move the effort by the two countries to “establish a new mechanism at the level of the foreign secretary and the deputy foreign minister to discuss all kinds of sensitive issues”. He said the “most important part is that the two sides should communicate, frankly and candidly”.
Economic ties could be the glue to bring the two sides closer. The range of economic ties might not be promising at present but holds the promise of a healthier future , a Chinese expert said.
Bilateral trade between the months of January and May fell by about 6% to $26 billion, compared to the same period last year. The chronic problem of trade deficit for India – and trade surplus for China – for the five months in 2016 is nearly a whopping $20 billion.
But the outlook for the future is strong.
“Chinese investment has strong enthusiasm to get into India, (it is) very active to get into the Indian market. Businessmen are trying to get to know India, to collect more information on the Indian market. Next step, they will invest,” said Liu Xiaoxue, an economist with CASS’s National Institute for International Strategy.
She said China’s venture capitalists are eagerly looking for overseas markets and India is the “hot destination” for them.