Xi Jinping's India visit to help diplomatic thaw, but business ties bound by suspicion: Analysts
While China-India relations have improved in recent years, businesses in both countries continue to face hurdles, underlining the gap between diplomatic progress and economic ties, say analysts.
Chinese President Xi Jinping and India Prime Minister Narendra Modi meet on the sidelines of the BRICS summit in Kazan, Russia on Oct 23, 2024. (File photo: China Daily via Reuters)
NEW DELHI: Chinese President Xi Jinping's visit to New Delhi this week, his first to India in seven years, should further the diplomatic thaw between the giant neighbours, but there are few signs as yet that their business ties will improve.
Businesses in both countries continue to face hurdles, including investments stalled by regulations, visa delays and restrictions on industrial equipment, underlining the gap between diplomatic progress and economic ties, analysts say.
China's foreign ministry has confirmed Xi will be in Delhi this weekend for the annual BRICS summit, but there is no word yet if he will have a bilateral meeting with Indian Prime Minister Narendra Modi, which will be crucial to set the future direction of bilateral ties.
China and India fought a brief war in 1962, setting the backdrop for a wary relationship since then, which soured after a 2020 border skirmish killed 20 Indian and four Chinese soldiers. Still, ties have improved in recent years, especially since Modi visited China last year and as both nations grapple with volatile relationships with the US.
"China certainly wants to improve ties, but we are waiting to see to what extent India is actually willing to improve them," said Lin Minwang, a South Asia expert with Shanghai's Fudan University and former diplomat at the Chinese Embassy in New Delhi, suggesting that any dramatic progress was unlikely.
Harsh Pant, vice president at New Delhi's Observer Research Foundation think-tank, said the "trust deficit" between the countries was high.
"China has economic heft and there is a good opportunity to use that and emerge as a reliable partner, especially when both nations are impacted by America's trade policies," he added.
In March, India eased some of the restrictions on Chinese investment that it imposed following the 2020 border clashes, focusing on electronics, capital goods and solar cell sectors. It is also considering faster approvals for joint ventures between Indian and Chinese firms in some industries.
Chinese President Xi Jinping is heading to New Delhi this weekend for the BRICS Summit, his first visit to India in nearly seven years. He is expected to hold talks with Prime Minister Narendra Modi, with observers hoping their meeting will signal a further thaw in ties after years of border tensions. Shifting global trade pressures are also expected to shape their dialogue.
Ishan Garg reports for CNA from New Delhi.
New Delhi has since approved a few significant projects, including a manufacturing venture between India's Dixon Technologies and Chinese ‌smartphone maker Vivo Mobile.
But that has not been enough to attract back leading Chinese companies like vehicle makers BYD and Great Wall Motor, which shelved planned investments in India after facing heightened scrutiny by New Delhi, according to an Indian government source.
Great Wall Motor and BYD declined to comment.
"PARTNERS, NOT COMPETITORS"
Chinese companies' proposed investments in India are facing more scrutiny from Beijing itself, including in sectors where sophisticated manufacturing and high-end technology may be involved, the source and another person said, both requesting anonymity as they were not authorised to speak to the press.
China's foreign ministry told Reuters that Xi and Modi, who briefly met this month at a regional forum in Kyrgyzstan, think the two countries are "partners, not competitors, and they represent opportunities, not threats, for each other’s development".
India's trade and foreign ministries did not respond to requests for comment.
New Delhi has declined to approve a proposal by Alipay, a platform related to China's Ant Group, to be linked to India's instant payments system, citing national security concerns, Reuters reported last week.
The Indian government is also considering a recommendation by its Serious Fraud Investigation Office (SFIO) that Chinese cellphone maker Xiaomi be investigated for alleged irregularities in its business in India and breach of foreign investment laws, Reuters has reported. Xiaomi said it complies with all local laws and has not received any communication from the SFIO.
At the same time, one of the Indian sources said, Chinese authorities have asked companies not to sell critical technology and infrastructure to India, including port equipment, solar panels and mobile manufacturing equipment. China's commerce ministry did not respond to a request for comment.
A possible further thaw in relations between China and India, after years of tensions over an unresolved border. India's National Security Advisor Ajit Doval is in Beijing, co-chairing the 25th round of talks with China's Foreign Minister Wang Yi. For decades, both sides have accused the other of trying to seize control of the roughly 3,500km-long border in the Himalayas. A deadly clash in 2020 between troops in the Galwan Valley had put a freeze on relations for years. The latest talks come ahead of a BRICS summit in New Delhi next month. Chinese President Xi Jinping is reportedly likely to attend with a large delegation, in what would be his first visit to India in seven years. Neha Poonia reports from New Delhi and Tan Yew Guan reports from Shanghai.Â
Last year, India and China resumed direct flights and New Delhi eased visa procedures for Chinese business professionals.
However, some Indian business people with interests in China have recently had trouble securing visas, according to one of the sources and an industry executive.
China's foreign ministry said it issues visas for "Indian nationals who have a genuine need to visit China" in accordance with the law and regulations.
This year, equipment and components made in China that India needs in key sectors such as solar energy and electronics as well as infrastructure development have been held up at Chinese customs, according to the industry executive and the two Indian sources.
Some massive boring machines from China for key infrastructure projects in India have been held up for more than a year, a third Indian source, a government official, said.
The hold-up of visas and equipment "reflects more than administrative friction" and shows China's willingness to use India's trade and technology dependence as leverage, said Ajay Srivastava, founder of New Delhi-based think tank Global Trade Research Initiative and a former Indian trade negotiator.
But a meeting between Modi and Xi could help dismantle some barriers, if it goes well.
Anup Wadhawan, a former top Indian trade official, said any meeting between the top leaders of the two countries will "always afford opportunities to better align political and economic interests".
"Of course, commercial ties are ultimately driven by the mutual economic interests of the citizens of both countries. Bilateral discussions can, however, work towards enabling these pathways to fructify."
