Following tensions on the border between China and India, all eyes are now on the G20 Summit in Hamburg, which will be attended by Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and other international leaders. China and India should engage with each other, and personally I believe the current trend of economic cooperation will not change direction even amid tension at the border, if Modi is a sensible politician.
Several days before the big bear hug that Modi gave US President Donald Trump in Washington on June 26, Indian border troops crossed the China-India boundary at the Sikkim section and entered Chinese territory. It sparked concerns that New Delhi may want to embrace the US and turn its back on China. However, I don’t think Modi would do a stupid thing like that. The principles of non-alignment have been in the minds of Indian politicians since independence. Additionally, India dare not risk cutting its economic ties with China.
India clearly hopes it can stay in the limelight at the G20 summit. Trump’s decision to withdraw from the Paris climate agreement in June offers an opportunity for India to play a leadership role in some discussions. India is unlikely to give up the chance but it may have to work with China to seize the opportunity. In 2009 at the Copenhagen climate change conference, then-US President Barack Obama reportedly crashed a “closed-door” meeting between China and India to coordinate the positions of developing countries on climate change, although senior US officials subsequently denied that this had happened. Now, Trump’s decision to quit the Paris climate agreement means China and India, as the world’s largest and third-largest emitters of carbon dioxide, must show leadership on the issue, and enhanced coordination between Beijing and New Delhi is needed. In this context, the G20 offers an opportunity for China and India to ease the tension in bilateral ties from the border situation.
India shares more common interests with China than with the US. Thanks to the “Make in India” campaign that has been initiated by the Modi administration, India is thirsty for manufacturing investment. However, with Trump’s efforts to bring manufacturing back to the US, China is one of India’s few options for ideal investment sources. Although India has refused to join China’s Belt and Road initiative, the country has been positive in attracting Chinese investment through multilateral platforms like the Bangladesh-China-India-Myanmar economic corridor. In Shanghai, I met with many investment promotion delegations led by chief ministers of Indian states, and next week, I will meet a delegation from the India China Economic and Cultural Council (ICEC). Despite the current strained relations between the two countries, it seems India still has enthusiasm for economic cooperation with China.
Media reports always focus on the “dragon-elephant” rivalry, campaigns to boycott Chinese products and other negative news, but in reality, there is strong will in India to attract Chinese investment, which can build a foundation for sustainable Sino-Indian economic ties. What deserves attention is how India can learn from China’s experience and implement its own development policy. Indian companies like Tata group have completed a series of overseas acquisitions in recent years, following the same path as China to develop their homegrown brands, in which technological advances have been achieved partly through a “technology introduction-digestion-absorption” approach thanks to overseas acquisitions. More time is needed to observe whether India can replicate China’s success, but a closer look at the Indian military industry, which previously relied on imports, shows that the country has already made some achievements in the localization of production and self-dependent innovation. As India’s national and economic strength grows, competition between the two countries may become fiercer, but benign business competition caused by India’s rise is welcome. I don’t worry about that.
India may face greater difficulties in developing economic ties with the US than with China. There is harsh anti-America sentiment in India, which prevents the country from being a close friend with the US. During their summit in Washington, Trump urged Modi to do more to relax Indian trade barriers, which means Modi has quite a lot of homework to do in order to ensure the summit was not just empty talk.