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How will Modi re-invent India’s China Policy?
June 2, 2014

So far every diplomatic move made by PM Modi, seems to have had the desired results. The SAARC Leaders Photo-op on his swearing in, followed by bi lateral meetings on the sidelines have signaled the Modi Govt’s foreign policy priorities loud and clear. Yet the elephant in the room, China, is soon to come calling.

How will Modi re-invent India’s China Policy

The Western Press has labeled Modi as India’s Nixon; an analogy drawing parallels with hard-line US President Richard Nixon, whose out-of-the-box approach led to US-China rapprochement in the 1970s. The Chinese media surprisingly has brushed aside Modi’s statements of ‘not tolerating an expansionist China’ as election rhetoric and expressed optimism both within the Chinese leadership and academia of closer India-China ties under a pragmatic Modi.

The Indian media is abuzz with details of PM Narendra Modi’s 30 minute conversation initiated by his Chinese counter-part Premier Li Kiquiang; conveying the Chinese leadership’s desire to build “robust” ties with New Delhi. Modi in turn is said to have called “China, a foreign policy priority” and welcomed President Xi Jinping for a visit later this year. Quick on the heels was the announcement of China’s Foreign Ministers visit to India this week, to hold talks with India’s foreign Minister Sushma Swaraj. Whispers in South block grew louder on how China was making a head start in ‘embracing Modi’.

Amidst all this hype, the positive seem to be that India’s China Policy is going to be shaken out of its inertia, the inheritance from UPA2.

Dr Manmohan Singh’s strides in UPA1 with an agreement in 2005 on guiding principles for a possible settlement of the boundary dispute became irrelevant in UPA2, with Chinese incursions rising to the point of the three week stand-off in Leh in 2013, where the two armies went head-to-head. Insiders have spoken often of the ineffectiveness of the Special Representatives mechanism, which in the ten years of its existence was reduced to managing the boundary dispute and not resolving it. Even the border defence cooperation agreement devised recently, was seen by hardliners within India’s policy establishment, as an attempt to arm twist India by an increasingly assertive China.

A rising trade deficit hurting India, China’s rapid military modernization, speedy border infrastructure development and ever expanding defence budgets, increasing presence of China in India’s neighbourhood with its ‘cheque book diplomacy’, fears of China monopolizing water resources like the Bramhaputra and China’s all weather friendship with Pakistan, have left the relationship wraught with tension. Modi’s govt has its hands full.

While Foreign Policy is understandably a long term process, a reset in the relationship seems to be the need of the hour. So how will Modi re-invent India’s China Policy?

Modi’s successful business relationship with China during his stint as the CEO-Chief Minister of Gujarat seems to be driving all the expectations of the ‘difference Modi will make’. Chinese Media announced that “Modi is ready to business with China”, recounting his four visits to China as CM, when he was able to capitalise most of China’s USD 900 million investments in India to Gujarat. “The new prime minister will boost India’s infrastructure and manufacturing, and then there will be myriad of opportunities for Chinese enterprises” says the Global Times.

For Modi, from whom India seems to expect miracles on a day-to-day basis, economics might once again come to the rescue in the face of the mounting strategic challenges vis-à-vis China. Modi’s manifesto promised job creation for young India, a rapid investment in infrastructure development and transforming India into a manufacturing hub – a stronger economic engagement with China could fulfill all of these promises. Data from the Economist suggests, as China’s workforce shrinks and its wages rise, up to 85 million manufacturing jobs might migrate elsewhere. India’s demographic dividend and manufacturing sector could benefit from this immensely.

A Chinese working group submitted a five-year trade and economic planning cooperation plan to the Indian government in February this year offering to finance as much as 30 per cent of the $1trillion targeted investment for the infrastructure development plan. The proposal to invest to the tune of $300 billion, looks at the railways, roads, telecom, and nuclear and solar power sectors. In March Premier Li Keqiang met with an Indian delegation led by Dy Chairman of Planning Commission MS Ahluwalia to finalise plans on “integrating” China’s technology in India’s railway and energy sectors terming it a “breakthrough” in Sino-Indian cooperation.

These plans have great potential, but are still pending approval. The past governments have been nervous about allowing China enter critical areas such as telecom or power over security worries. How Mr Modi uses his decisive mandate to break this policy paradox will be the challenge ahead.

Despite the spin on Modinomics, Mr Modi will be aware of the strategic dilemmas posed by China. The possibility of another ‘incursion’ will be met with expectations of a hard response from the ‘nationalistic’ Modi. The BJP led by Mr Modi had criticized the previous Congress government for its weak response to Chinese aggression in the past.

The asymmetry in geo-political power between the two countries too has never been more obvious: China is the second largest economy expected to overtake the US soon, its GDP is four times that of India, it the second largest military power in the world and spends four times as much as India on its defence and has built state of the art infrastructure along its borders with India. A massive programme to build roads and upgrade airfields in India’s corresponding borders has paled in comparison. Despite having clearances from the ousted Congress government, lack of funds in India’s sinking economy affected the plans.

Modi’s appointment of former army Chief and BJP Parliamentarian, Gen (Retd.) VK Singh, with an Independent charge of the North East has been seen as deliberate plan to revamp national security. Apart from development of the border regions, the former general may also speed up India’s plans to establish a corps of 80,000 troops along its border with China in the northeast.

Modi is also expected to build on Dr Manmohan Singh’s relationship with Japan, with an eye on China. Japan, China’s arch rival, offers the alternative potential to uplift the Indian economy by offering massive investments in India’s infrastructure, energy, education and defence sectors. Japan with its Overseas Developmental Aid is already India’s biggest benefactor. Its expertise in the successful Delhi Metro Project and the currently underway Delhi Mumbai Industrial Corridor, have made it a reliable partner.

Like China, Modi as Gujarat CM has visited Japan in 2007 and 2012 for investment opportunities. However the highlight has been Modi’s decade long relationship with current Japanese PM Shinzo Abe, which is expected to have larger ramifications for Indo-Japan ties. Japan is touted to be the centre-piece of Modi’s ‘look east’ policy. Defence ties are expected to grow with Japan’s new approach under Abe. Abe has been keen to build security new relationships with India and ASEAN countries with an eye on rising territorial battles with China. With Modi’s push on economic diplomacy, bi-lateral trade is expected to touch new heights.

Like Japan, other countries from East Asia like Vietnam, Philippines, Singapore, S.Korea etc are looking at Modi and India to revitalize relationships and provide a new dynamic to the balance of power in Asia. China will be watching closely.

China rolled out the red carpet for Modi during his tenure as Gujarat CM and showered on him courtesies normally reserved for heads of government. For PM Modi, China has taken the initiative in terms of outreach. Don’t expect anything dramatic from Mr Modi, except for sorting out the bottlenecks in India’s China policy, with decisiveness driven by his clear mandate. The challenge for Modi however is to achieve the balance between economic opportunity with his brand of Modinomics and the strategic realities ; else Beijing’s enthusiasm for Modi maybe short-lived.

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Disclaimer: The views expressed are of those of the author and do not represent the views of

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