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China dashes $100-bn hope, to invest $20 bn over 5 years

The expectation of a $ 100-billion Chinese investment in India got reduced on Thursday as the country committed itself to investing only $ 20 billion here over five years. The issue of border tension between India and China also came up during Chinese President Xi Jinping’s meeting with Prime Minister Narendra Modi, on the second day of the former’s maiden visit to the country.

Modi, though, did not harp much on the issue of defining the line of actual control (LAC) and incursions as strongly as was expected, a top official in the know of what transpired behind closed doors told Business Standard.

Modi had appeared unusually relaxed in a beige kurta and an off-white Nehru jacket as he sat for the much-awaited bilateral talks with an exuberant Xi at the swish Hyderabad House here.

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The prime minister said it was imperative to settle the issue of border dispute soon, as that would help gain mutual trust and confidence. “Clarification of LAC will greatly contribute to our efforts to maintain peace and tranquility. We should seek an early settlement of the boundary question,” Modi said, adding in the same breath, border-related agreements and confidence-building measures between the two sides “worked well”.

Many said the new stance — without the usual rhetoric, in a departure from the practice of previous prime ministers — signalled pragmatism. According to another official, Modi was “determined” that this time he would show the Chinese government that India meant business and not just crying foul over border issues.

On his part, Xi said many incursions took place due to non-demarcation of the border. “China has the determination to work with India through friendly consultation to settle the boundary question at an early date.”

He also said China believed in having “peace and harmony” with its neighbours and would be ready to support India’s permanent membership to the United Nations Security Council, provided the border dispute was settled. “We will support India’s seat in the UN Security Council. But both neighbours might have to encounter some problems before that. We would first like to settle the border issue in a way that is fair, mutual and acceptable to both,” Xi said while addressing an event organised by the Indian Council of World Affairs (ICWA).

Apart from signing as many as 15 memoranda of understanding (MoUs) over two days — plus the 27 that were signed among private firms of both countries — China committed itself to investing $ 20 billion in India over five years across all sectors of the economy.

Earlier, there were reports that China might commit $ 100 billion worth of investments in India’s infrastructure development, though there was no official word from Beijing. Had it been so, the Chinese commitment would have been more than the $ 35 billion promised by Japan during Modi’s recent visit to Tokyo.      

Ahead of Xi’s visit, Chinese embassy officials had briefed Indian scholars that the investment promised would be $ 100 billion. How this figure came down to $ 20 billion remained a mystery, the scholars confessed.

The $ 55 billion investment by Japan and China is 5.13 per cent of the $ 1.07 trillion the Confederation of Indian Industry reckons India would need to build its infrastructure over the 2014-19 period. The Chinese commitment is 1.86 per cent of this requirement.

In the past 10 years, China has invested $ 400 million in India. “We agreed that our economic relations did not do justice to our potential. I expressed concern over the slowdown in trade and the worsening trade imbalance. I sought his partnership in improving market access and investment opportunities for Indian companies in China. President Xi assured me of his commitment to taking concrete steps to address our concerns. I have invited Chinese investments in India’s infrastructure and manufacturing sectors. I also apprised him about our new policies and administrative steps in this area,” Modi said after his meeting with Xi.

China said it would set up two industrial parks — one each in Gujarat and Maharashtra — which would act as both manufacturing and export hubs. The initial plan is to manufacture power equipment and then gradually expand to making electronic goods and telecom equipment. These parks are expected to be spread over 1,250 acres.

China will also actively participate in developing the country’s rusty rail network. For this, the Chinese seem to have developed a two-pronged strategy. On the one hand, they will increase speed on the existing railway line from Chennai to Mysore via Bangalore, with the Chinese side providing training in heavy haul for 100 Indian Railway officials. On the other, the two sides will cooperate in areas like redevelopment of existing railway stations and setting up of a railway university here. India is also considering cooperating with China on a high-speed rail project.

According to Modi, these measures would open a “new chapter in our economic relations”. He later tweeted a wide range of issues were discussed over two days and both countries decided to “deepen the engagement”.

The issue of soaring trade deficit was highlighted by Modi in the strongest terms possible, sources said. The prime minister also sought improved access to Chinese markets for Indian products and easy investment opportunities for Indian companies.

An agreement was signed between Commerce & Industry Minister Nirmala Sitharaman and her Chinese counterpart Gao Hucheng to address the problem of trade deficit by giving enhanced market access to Indian agricultural and pharmaceutical products, besides services. Ronen Sen, India’s former ambassador to the US, said the Xi visit had changed the tone of India-China bilateral relationship. “We should stop looking at China from the way we used to. Today, trade and investments have become an integral part of the bilateral relationship. We need to economically integrate with them more, for our own benefit. We should, as Prime Minister Modi this time rightly did, change the predictability factor in our bilateral ties,” Sen said.

Earlier in the day, Chief of Army Staff Dalbir Singh Suhag and other generals had gone armed with detailed maps ahead of Defence Minister Arun Jaitley’s participation in a meeting with Xi. They had briefed the minister on the standoff in Chumar and about the ground situation on the demarcation of the border along the LAC.

MAJOR AGREEMENTS
  • ndia and China agree to resolve border dispute and define the Line of Actual Control soon
  • Both sides agree to look at greater cooperation on the issue of shared rivers
  • Take positive steps towards rebalancing bilateral trade and addressing the existing structural imbalance in trade
  • China to set up two industrial parks for 1,250 acres each in Gujarat and Maharashtra
  • China to invest $ 20 billion in various industrial and infrastructure development projects
  • Increase speed on the existing railway line from Chennai to Mysore via Bangalore
  • Chinese side will provide training in heavy haul for 100 Indian Railway officials
  • Cooperation in High Speed Rail project
  • Annual visits at the level of Heads of State/Government
  • City in each country would be identified for a smart city demonstration project
  • BCIM (Bangladesh, China, India, Myanmar) Economic Corridor to be expedited
  • Chinese side decided to open a new route for the Mansarovar Yatra through Nathu La Pass
  • China will be the partner country at the Delhi International Book Fair 2016.

India welcomes Xi

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