Modi’s China Visit

It may finally boil down to economic pragmatism…

Almost 53 years after the disastrous Indo-China war, it has continued to be the theme behind Indo-China relations. It is in this light that the Modi visit to China assumes significance as it focuses on the need to build economic co-operation between the two countries. This visit has underlined the need to put economic reality over political history.

Journey from Mao to Xi Jinping…

The Indo-China standoff in the late fifties began with both countries staking claim to the Aksai Chin. The situation further deteriorated after the Dalai Lama openly challenged the Chinese authority by seeking refuge in India. Post the 1962 war, things continued to remain frigid between the two countries. Ministers like George Fernandez only made matters worse by clumsily classifying China as “Enemy No. 1”.

Nor did China stop the needling. If on the one hand, China laid claim to Arunachal Pradesh; on the other hand they undertook construction projects in Pakistan Occupied Kashmir (POK).

So what has changed since then?

Probably, both nations see no economic point in continuing this frosty relationship. There are a variety of ways to look at this problem. Firstly, look at trade. China is the world’s largest exporter and its trade with South Asia alone is worth over $100 billion. But Indian trade with China is just about $20 billion. Obviously, these two countries are punching way below their size and capacity. Secondly, China and India represent two of the world’s largest markets; both for industrial and consumer goods. With a combined GDP of $12 trillion and growing at over 7%, it would be inane for these two nations to be hostile towards one another. Lastly, India and China have learnt from Europe that the way to political peace is through economic interdependence.

What India seeks from China?

India requires over a trillion dollars in infrastructure. There are few case studies that are as successful and vibrant as China. Modi wants to make the best of that. Modi also realizes that the real game-changer in renewable energy was China. It became meaningful only after China managed to make cheaper and more reliable components. Modi also realizes that his dream projects like Smart Cities and “Make in India” need Chinese expertise.

There is also a very strong geopolitical angle to it. With both countries investing heavily on military hardware, neither would want to trigger hostilities. For India and China, a closer cooperation could be the trump card if the US tries to play hardball. Two smart men; Modi and Xi have finally let market realities dictate the future of Indo-China relations. It should be good for both. ©

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