Advantage Modi Series-III

Advantage Modi-Series III                                                                                     September 25, 2014

High on expectations, low on delivery

All those who expected Chinese President Xi Jinping’s visit to set the template

Nobody expected Prime Minister Narendra Modi and Chinese President Xi Jinping to wrap their arms around each other in a bear hug. A Right-wing nationalist BJP-led government in India and a Communist Party of China that relies heavily on nationalism as a crutch for continued legitimacy at home were not expected to have it easy at the first formal summit of their leaders, especially on political and strategic issues. However, expectations were sky-high on the exonomic front. The Chinese commitment of $20 billion is being seen as a big letdown but one must ask how realistic the initial figures were in the first place. Sure, China has the forex reserves but that is not the same as saying they will necessarily find it profitable to invest given the difficult regulatory environment surrounding the entry of Chinese enterprises and people into India.

Modi has been on record calling the states for a greater role in the country’s economic growth and development. There is also then the question of the capability of the states to absorb and handle the massive investments being talked about. Apart from a few states such as Gujarat, Maharashtra, Andhra Pradesh and Tamil Nadu, very few have the combinations of high-quality governance, physical infrastructure, socioeconomic purpose, including a friendly investment climate, required to attract global capital. It is no wonder then Chinese and Japanese investments remain concentrated in only a few Indian states. To return to the boundary dispute, Chinese incursions along the LAC and other forms of provocation on the eve of an important visit to India should not surprise us anymore, even if the recent incursions at Depsang and Chumar differ from the usual patterns. Policymakers and strategists cannot expect a static environment to deal with in their line of work. And despite what the media might report, there is no doubt that the government and military have been proactive along the Line of Actual Control, including in the previous UPA regime. But perhaps, Modi erred in taking a rather too assertive line on the dispute and discomfiting his visitor who might have been amenable to offering concessions on other fronts.

The ease of access that Tibetan protestors had to the environs of Hyderabad House certainly did not happen without the knowledge of officials of the Modi government. This foolish tactic might have pleased a certain section of Modi’s constituency but it also takes the attention away from more serious moves by the Chinese with respect to Tibet. In his speech in New Delhi, Xi laid heavy stress on the cultural ties between the India and China, including their Buddhist linkages. That said, our policymakers have hopefully also not missed the overtures that the Dalai Lama has been making to Xi since he came to power and the recent rumours in the Chinese blogosphere of the Dalai Lama possibly being invited to Beijing before long. If Xi begins to show a greater degree accommodation on this front, Tibet will soon cease to be a card for India and the world vis-à-vis Chins. And no one should doubt the capabilities or the flexibility of Xi and the Communist Party on this front.

Finally, another agreement that was missing during Xi’s visit was one on information sharing by China on trans-border Rivers. Over the last several years, every, major visit has usually had an agreement that extended the time frame for such sharing by an incremental 15 days. While the agreements on sister-city and sister-province/state relations are an important trend for the future, it is the many agreements that appear not to have been signed that should worry those who expected Xi’s visit to set the template for the future.