The tense stand off between India and China; a power play of strategy, sovereignty and territorial interests of two emerging Asian nations has the region in a tight wrap. With spillover effects into our economies and society, a clash between the Asian titians is unlikely, yet it’s going to take more than man and machine for either country to back off first.

With autocratic leaders at their helm, both China and India need to prove to the region and world, that the other is surmountable. As both nations flex their muscles, military analysts expect to see China test India on her vulnerable Eastern border more and India fight back with equal strength and vigour to protect her territory.

Read more

As rightly put by Shivshankar Menon, India’s former national security adviser, the relationship between India and China is clearly under stress. “We need to find a new equilibrium between elements we’ve always been juggling — economic competition and complementarity, and strategic sensitivities” – he told the Financial Times.

The sweet and sour neighbours, China and India have recently been at loggerheads over several issues which are gaining heightened importance as both stalwart heads of state, Prime Minister Modi and President Xi take charge of their bilateral affairs.

The buzzword is that over a slew of meetings scheduled in the next 3 months, both leaders are expected to iron out their differences and tango more in complement with each other. The first visit on August 12 was by Wang Yi, China’s foreign minister to New Delhi. The aim of the meeting was to lay the communication groundwork before the upcoming G20 Summit in Hangzhou, China and the BRICS Summit in Goa, India. In other wards, it was Mr. Wang’s agenda to make sure India doesn’t stoke dissent against the South China Sea dispute.

During his visit, Mr. Wang met Indian Prime Minister Narendra Modi, National Security Adviser Ajit Doval, External Affairs Minister Sushma Swaraj and the Governor and Chief Minister of Goa. Chinese state councillor and former foreign minister Yang Jiechi, who is Beijing’s designated special representative for border negotiations is also expected to visit India soon to quell tensions that have arisen with Beijing’s unilateral support of Pakistan. The flourishing friendship between India’s tense neighbours – China and Pakistan has created a strong rift in India China relations. With China asserting her infrastructural and investment muscle in Pakistan. Mr. Yang will need to come with a strong strategy if the two nations are going to support each other in the upcoming meetings.

Read more

Mr. Han Zheng, Communist Party Secretary of Shanghai, and a member of the Politburo of the Communist Party of China visited India on a landmark 5 day tour of Delhi, Mumbai and Bangalore.

Mr. Zheng who was accompanied by a 80 member business delegation met Indian Prime Minister Mr. Narendra Modi in New Delhi and in Mumbai met heads of companies including Mr. Cyrus P. Mistry, Chairman of Tata Sons, Mr. K V Kamath President, New Development Bank and Mr Rangarajan Vellamore CEO, Infosys Technologies (China) Co Ltd.

The architect of modern day Shanghai, Mr. Zheng’s maiden visit of India was to lay the ground work for stronger collaborations between the two nations. While cross border investments in the IT, financial services, transport and healthcare sectors were highlighted, the leaders of the two nations also talked of building stronger links between China and India. Mumbai and Shanghai became sister cities in 2014, however since then little has been done to collaborate or cooperate. It is hoped that this initial visit will lay the groundwork for future ties between the two trading cities.

Read more

~ by Charmaine Mirza

The United Kingdom’s Brexit vote to leave the European Union has hard-hitting implications on both China and India. While the true impact will be felt only in the years to come, Inchin Closer peers into the future to see what lies ahead for the diamond and ruby of the British Empire.

CURRENCY CRUNCH: The Reserve Bank of India feels that the INR is adequately buffered against the GBP. London is the second largest RMB trading hub after Hong Kong. If global banks exit London, Beijing may have to scramble for a new base. In the long run, a depreciated pound could prove beneficial to savvy investors from both countries, who will swoop in to take advantage of the devaluation.

INBOUND INVESTMENT: Thus far, both Indian and Chinese companies used the UK as a convenient conduit for unshackled access to the European markets, to circumvent the EU’s protectionist view on global trade. If the UK can no longer serve this purpose, it will certainly impact inbound investment from China and India into the UK.

Read more

Border relations between sweet and sour neighbours India and China are showing slight improvements with the BCIM – Bangladesh – China – India – Myanmar project finally getting off on the right foot. The New Silk road project which has an estimated trade potential of US$132 billion,has just 200 kms of road to be concretized before Kolkata in India will seamlessly be connected with Kunming in China.

The BCIM economic corridor is expected to add a major boost to India-China trade as India looks at developing her North-East region bordering China and Beijing looks for alternative routes to the strait of Malacca. Both governments hope that the BCIM economic corridor will be a starting point for stronger bilateral relations. An Indian consulate in Kunming and a Chinese consulate in Kolkata are already in place.

Read more

Indian Prime Minister Narendra Modi’s visit to Xian, Beijing and Shanghai has high on visuals yet, low on impact. The two countries had a lot of hopes riding on the shoulders of two of the most nationalist leaders we’ve had in decades, yet the steps taken to achieve any substantial impact either on economic, political or border issues was subpar.

During his three day visit, accompanied by the Chief ministers of some of India’s most prosperous states and heads of large Indian companies, Mr. Modi met Chinese president Xi Jinping in Xian his hometown, Prime Minister Li Keqiang in Beijing, Chinese and Indian students, businessmen, investors and society. He signed 21 MOU’s worth US$ 21 billion.

Funding from Chinese banks ICBC and China Development Bank for Airtel, Adani Power Company and Jindal Steel and Power accounted for the major part of the agreement total, as did tie-ups for renewable energy companies. The two countries share bilateral trade of US$70 billion, making China India’s biggest trading partner, but the figure is worryingly skewed, with an estimated US$40 billion in favour of China.

Read more

China’s devaluation of the Ren Min Bi or peoples currency is expected to have a less than dramatic effect on the Indian economy – the most affected sectors being textiles, metals and chemicals.

While the yuan becoming cheaper against the dollar will mean that Chinese exports rise, slightly spurring the economy, analysts expect it to have little impact on the Indian economy as the two little compete for much in the global economy. Brought on by a move from Beijing to delink the yuan from the dollar and change the currency’s reference rate, the Peoples bank of China has taken a baby step towards making the yuan an international currency.

In the short term what experts are worried about though is that it will tilt the basket of goods further in favor of China, increasing the already yawning trade deficit between the sweet and sour neighbours. The widening gap in trade has historically always led to pressures both external and internal on the Indian government, which lends itself to often damaging international relations with China. With the Indian government already balancing under bad loans hoarded on Public Sector Banks, the Reserve Bank of India will need to take drastic measures to maintain a 7+ percent GDP growth this year.

Read more

Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and President of the United States Barack Obama came together for a heady week of negotiations, multi billion dollar deals, photo ops with business and technology leaders and bids to seal the growth of their nations.

As each economy carefully hinges on that of the other, both Mr. Modi and Mr. Xi coaxed larger investments from the worlds richest democracy in exchange for a small piece of the pie that America always wanted – better transparency, a curb on corruption, protection of intellectual property rights, climate change enforcement’s and opening up their economies further.

While meetings hussled around the UN general assembly, Modi and Xi both received accolades for their work in American Media. China having a larger economy and much higher trade targets than India, found herself on more front pages than Mr. Modi who is holding on tightly to the sheen of his India shining. India and the US are hoping to increase bilateral trade to US$500 billion in the next few years from the current US$120 billion. China’s bilateral trade with the US is already around the US$500 billion mark.

The idea was for each megalomaniac leader to drum up investments and create an international stir to drive their economy forward. For Modi this 2nd trip to the US was a whirlwind affair braced at pushing his “Made in India” campaign tweaked at increasing India’s manufacturing sector which will hopefully absorb the millions leaving agrarian land and graduating by 2020. For Xi, this was his first state visit to the US, marked by a lavish state dinner hosted by US President Barack Obama at the White House.

His statement was to boost the Chinese economy with the higher value goods, services and American expertise. In addition to hob-nobbing with leaders in Washington, Xi visited Seattle and Modi Silicon Valley. Xi began his week-long visit in Seattle addressing a gathering of 650 business executives, while Modi chose New York to kick off his five-day visit, addressing two round tables—one of financial investors and another with representatives of media and communication companies including Comcast, Time Warner, Discovery, Sony, ESPN, News Corp., 21st Century Fox, Disney and the ABC television group.

Read more

China’s president Xi Jinping visited Indian Prime Minister Narendra Modi on his home turf to strengthen bilateral relations and augment trade and investments between the two countries. While the ensuing border dispute was on the agenda, simultaneous incursions, and nonchalance by visiting Chinese delegations both before and after the Presidents visit numbed down the issue for India.

The border wasn’t the only moot point between the neighbours, strangely just a week before President Xi’s visit, the Chinese Ambassador to India, was suddenly and unceremoniously asked to return home. While the readjustment within the cadre has sent diplomatic rumour mills on fire, it did stoke nerves of distrust amongst the sweet and sour neighbours.

Nonetheless, on the outset, China – India relations blossomed. The two nations signed 16 agreements in Delhi (for the full list click here), one of which will see China investing US$20 billion (£12.2billion) in India’s infrastructure over five years. Landmark agreements were also signed to realign India’s railway system on modern lines and build atleast two Special Economic Zones exclusively for Chinese companies to manufacture and export from. Other deals were also signed in the pharmaceuticals and farm products space as well as increasing co-operation in trade, space exploration and civil nuclear energy. Softer issues were also touched upon and signals were given for boosting language and cultural ties between the people.

Read more

To boost Sino-Indian relations, Chinese foreign minister Wang Yi will visit India on June 8 to meet Prime Minister Narendra Modi. The visit is to be followed by President Xi Jinping who is expected to be in New Delhi in November. The last Chinese head of state to visit India was Primer Li Keqiang in 2012. Going by the growth trajectory, China’s expectation from India’s newly sworn in government and the deals that were initiated in 2012, the president’s visit will promulgate China-India ties to a new crescendo.

While their political ascent is drastically diverse – one a princeling, another an ordinary tea seller to prime minister, the hope is that Xi Jinping and Modi’s meeting will signal better days for our bilateral relations. On the cards are rising exports, consolidating their stance during international and regional meetings and coming to an agreement on the contentious border issue.

The stakes are high. both governments have a vested stake to bring to the table. Many Indian companies including the Reliance group and Adani Power who have grown up in Modi’s backyard are indebted to the Chinese, further, as the Chinese economy stagnates, India is a highly lucrative market to invest in. How each goes about it and which interests are held will only be laid out when Xi and Modi meet in November, later this year.

Read more