Xi to Meet Modi for Dinner as Economy Tops Agenda

Chinese President Xi Jinping arrived in India today as the world’s two most populous countries look to bolster economic ties and resolve a long-running border dispute.

Dancers in traditional costumes and a police band with bagpipes performed in the background as Xi and his wife were welcomed with a bouquet of flowers by leaders in the western state of Gujarat, which Prime Minister Narendra Modi ran before taking office in May. The leaders will share a private meal along a riverfront in the state’s former capital of Ahmedabad and also hold talks in New Delhi tomorrow.

“It’s a very significant visit as leaders of Asia’s two BRIC countries want to create more economic momentum in the bilateral relationship,” Rajiv Biswas, IHS Global Insight’s Asia-Pacific chief economist, said by phone from Singapore. “Modi is trying to improve India’s exports to China to reduce the trade deficit, and also to boost Chinese investment flows into the country in infrastructure and urban development.”

Modi is seeking Chinese support for his moves to revive Asia’s third-biggest economy while deterring it from asserting control over disputed land along the border. He met Japanese leader Shinzo Abe in Tokyo earlier this month and will visit President Barack Obama at the White House two weeks from now.

Modi told Chinese journalists yesterday that the two countries “can create a better tomorrow for all of mankind.” More than a third of the world’s people can have better lives if India and China boost economic cooperation, he said, according to an Indian government statement. The BRIC grouping, also comprising Russia and Brazil, will grow faster in 2014 than the global average, according to data compiled by Bloomberg.

Investment, Trade

China is India’s largest commercial partner, and also accounts for its biggest trade deficit. While bilateral commerce exceeded $68.5 billion last year, India posted a trade shortfall of $34.4 billion on imports of Chinese-made heavy machinery, telecom equipment and home appliances, according to data compiled by Bloomberg.

India is seeking greater market access in China and will probably sign an agreement for China to set up industrial parks, Indian Trade Minister Nirmala Sitharaman told reporters in New Delhi on Sept. 10. Xi will also announce investments in India’s railways, the Press Trust of India reported.

Airplane Financing

Industrial & Commercial Bank of China Ltd. today signed a deal to provide $2.6 billion in financing for IndiGo to buy and leaseback more than 30 Airbus A320 planes, Aditya Ghosh, the Indian carrier’s president, said in a statement today.

In the 14 years through June, China was India’s 28th largest source of foreign direct investment with inflows worth $411 million, or 0.18 percent of the total, government data show. Japan was fourth and the U.S. was fifth.

Tensions have simmered in the past few years over claims to disputed territory on their mountainous border. In campaign speeches earlier this year, Modi warned China to drop its “mindset of expansion.”

India accuses China of occupying 38,000 square kilometers (15,000 square miles) in Jammu and Kashmir, while Beijing lays claim to 90,000 square kilometers of land in the Indian state of Arunachal Pradesh.

Chinese incursions have occurred in the area this month, PTI reported, and the countries have seen sporadic border clashes over five decades. They fought a war in 1962 and China opposes the Dalai Lama, Tibet’s spiritual leader, who campaigns for Tibetan autonomy and human rights while in exile in India.

Border Tension

“Regarding the border issue, the Chinese stance has always been consistent and clear,” Chinese Foreign Ministry spokesman Hong Lei said in a briefing in Beijing yesterday. “The Sino-Indian borders have been peaceful for a long while and the border issue hasn’t affected the development of the Sino-Indian relations. We hope both countries can keep it up to maintain this healthy momentum.”

China also warned that it would oppose any Indian agreements with Vietnam to explore for oil and gas in disputed areas of the South China Sea, Times of India reported, citing Hong.

India will discuss “all substantive issues of interests” including the border dispute, India’s Foreign Ministry Spokesman Syed Akbaruddin, said in New Delhi on Sept. 15. Investment in smart city projects, railways and cooperation on nuclear energy will probably be included, he said.

Japan Ties

Xi’s visit to India -- the first by a Chinese president since 2006 -- follows Modi’s trip to Japan, which has its own territorial dispute with China. Abe pledged a sweeping upgrade of economic and security ties with India, offering 50 billion yen ($480 million) in infrastructure loans and pledging 3.5 trillion yen of public and private investment and financing over five years.

The meeting between Modi and Xi is “unlikely to result in meaningful progress towards any bilateral strategic partnership,” Arvind Ramakrishnan, head of India at U.K.-based risk adviser Maplecroft, said in an e-mail. “Modi is far more inclined to cultivate strategic ties with Japan and the U.S. in order to make India a counter-balance against Chinese influence in the Asian region.”

Still, the countries have links going beyond 145 B.C., with China exporting silk to India in exchange for pearls and coral. Modi, who turns 64 today, is India’s first prime minister born after independence in 1947. Xi, 61, is China’s first leader born after the 1949 revolution.

Candlelight Dinner

Xi and Modi will walk along a river and share a candlelight dinner that will feature more than 100 dishes, Xinhua reported. Performances during the meal will feature traditional Indian dancing and automated lions, it said.

India can benefit from China’s strength in creation of infrastructure and development of the manufacturing sector, while India’s strength in software can help Chinese companies become more efficient and competitive, Modi said yesterday.

“The combination of the ‘world’s factory’ and the ’world’s back office’ will produce the most competitive production base and the most attractive consumer market,” Xi wrote in the Hindu newspaper today.

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