Beyond sweet talk and tempting deals

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For Xi, the stakes in a successful visit to Delhi are high.

Posted: September 17, 2014 

By: Minxin Pei

As New Delhi gets ready to roll out the red carpet for Chinese President Xi Jinping, the question on the minds of most observers is, what exactly does he seek to accomplish during his state visit to India?

Few doubt the importance of Xi’s visit. Both countries have recently changed top leadership. Establishing a good working relationship at the top is a necessary step towards managing the complex and friction-prone Sino-Indian ties. For Xi, the stakes in a successful visit to Delhi are high. Since assuming his position as the Communist Party of China’s general secretary in November 2012, Xi has opted for a risky foreign policy strategy that has resulted in a simultaneous deterioration in Sino-Japanese and Sino-American relations — a troubling development for a country that has prided itself on a pragmatic and low-profile foreign policy for the last three decades.

While Xi may be eager to show Washington and Tokyo his toughness, he nevertheless seems aware that he would be courting assured strategic encirclement if he antagonises China’s powerful neighbour to the west — India. A sensible policy towards Delhi, therefore, should be one that seeks to reduce India’s fears of growing Chinese power and assertive foreign policy behaviour. This objective, modest as it may seem on the surface, is not easy to achieve. Mutual strategic suspicions run deep. Longstanding contentious issues, in particular unresolved border disputes and Chinese support for Pakistan, greatly limit the extent to which bilateral relations can be improved.

Therefore, from the Chinese perspective, Xi’s visit has high stakes but modest, albeit realistic, objectives. The India-China summit will be seen as a success if both sides reach a fundamental understanding that a strategic conflict between the world’s two largest developing nations is both unnecessary and calamitous.

Yet, reassuring rhetoric may not be enough to allow Xi to earn Prime Minister Narendra Modi’s trust. Xi needs to back up his words of reassurance with concrete action. There are three ways Xi can charm and convince Modi, who has carefully avoided upsetting Beijing, that India can gain far more from working with China than working against it.

The easiest way is to use effusive rhetoric and symbols to show that China truly values its ties with India and regards India’s rise as a great opportunity, not a threat. China can garner some goodwill in India by expanding cultural and education exchanges aimed at raising India’s profile and prestige in China (where knowledge of India is abysmal). Beijing has recently upgraded its diplomatic presence in Delhi. The new Chinese ambassador to India, Le Yucheng, is the first Chinese diplomat with the rank of a vice minister to be posted in India. The easiest way is to use effusive rhetoric and symbols to show that China truly values its ties with India and regards India’s rise as a great opportunity, not a threat.

Although most people may not grasp the symbolic subtlety of appointing a vice ministerial diplomat as ambassador, the decision to send Le to Delhi reflects the greater weight China now gives to India. Of Chinese diplomatic missions abroad, only those countries considered strategically important are represented by vice ministerial diplomats: the United States, Russia, Japan, North Korea, Great Britain and now, India.

The second and principal means of wooing India will undoubtedly be trade and investment. Xi is expected to bring a large entourage of business executives and announce billions of dollars in contracts during his visit. Beijing’s intention is quite clear. It hopes to show Delhi the enormous bilateral commercial benefits that would be lost if Sino-Indian relations became needlessly hostile. China has been India’s largest trading partner since 2011, and the two-way trade was nearly $66 billion last year (down from the record of $74 billion in 2011).

However, India runs a huge deficit with China ($31.4 billion last year). Given the lopsided trading relationship, China has more room for concessions. In particular, China can benefit greatly from India’s competitive hi-tech services sector and generic pharmaceutical industry. With rising wages and huge capital savings, China should also find India an attractive destination for direct investment.

But sweet talk and tempting business deals, however helpful, are not enough to assuage India’s concerns about China on the security front. Admittedly, bilateral security issues — border disputes, military deployment and Chinese support for Pakistan — are the most difficult to resolve. While no breakthroughs are expected during Xi’s visit on these issues, we nevertheless hope that Xi will, against conventional wisdom, exploit the bilateral security issue to his advantage. Given Xi’s enormous political authority and Modi’s sweeping mandate, we have a rare opportunity when two strong leaders may be able to strike a deal on the Sino-Indian border disputes. Indeed, one way of evaluating the success of Xi’s visit is to see whether there is any announcement on this issue.

In addition, Xi can further demonstrate his commitment to a durable peaceful relationship with India by broaching the sensitive issue of Pakistan (Xi cancelled his stop in Islamabad because of the ongoing political turmoil there). For a long time, China has propped up Pakistan as a useful ally in counter-balancing India in the subcontinent. But the security benefits gained from this strategy are now diminishing. Domestic political instability and terrorism are increasingly making Pakistan more of a liability than an asset. A Machiavellian ploy to tie down India with Pakistan will only succeed in pushing India deeper into the arms of the US (and now Japan). The net outcome is negative for China. To be sure, it would be unrealistic to expect anything substantial to occur during Xi’s visit. But if Xi can reassure Modi that he will review ongoing Chinese assistance to Pakistan (especially in the nuclear energy area) to address India’s concerns, that could be a promising start.

It is unclear whether Xi’s advisors are aware that strategic reassurance will not bear any fruit unless China takes some of these steps. Let’s hope they are.

The writer is professor of government and non-resident senior fellow at the German Marshall Fund of the US

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