The Economist
September 20, 2014
Fanfares for a common man.
On his tour of South Asia this week, President Xi Jinping of China went out of his way to be reassuring. In Male, the cramped capital of the Maldives, he spoke of his dream of a “maritime Silk Road” to increase trade across the Indian Ocean. He proffered gifts: funds for a big road bridge and a promise to operate the tourist airport. For such a tiny country, the first visit in four decades by a Chinese leader should boost tourist numbers. As it is, Chinese make up a third of holidaymakers.
In Sri Lanka, the next stop, Mr Xi was met with state-orchestrated adoration. In Colombo, the capital, on September 16th, a crowd of schoolchildren greeted him waving Chinese flags and sparkly pompoms, along with a troupe of 40 decorated elephants (the Chinese president had let it be known that they are his favourite animal). The ruling family of President Mahinda Rajapaksa enjoys close commercial, diplomatic and defence ties with China. Now the hope is for people-to-people ones. Mr Xi did not indulge in one of the casinos in Colombo designed to lure 24-hour-a-day Chinese gamblers on charter flights, but he pledged a steady flow of businessmen who might. And as a gesture to emphasise China’s infrastructure push, Mr Xi and 200 drummers went along to the site of a landfill island off Colombo which the Chinese will turn into a commercial town at a cost of $1.3 billion, right by a new Chinese port.
That comes on top of an existing Chinese-built port at Hambantota, the Rajapaksa heartland in southern Sri Lanka. Other Chinese-backed infrastructure projects are intended to help Sri Lanka become a regional trading hub. But what happens if—when, say some—the loans that fund these projects are not repaid? Some Sri Lankans worry that Chinese state-backed firms will take over sizeable tracts of land and control strategic assets; it is only a small step from there for China to be meddling in Sri Lankan affairs. Mr Xi bats away the possibility. He has written reassuring letters in various corners of the South Asian press this week, pointing to the sacred Chinese principle of non-interference in internal affairs.
Some in India watch warily. Its diplomats are concerned whenever China swans about in their backyard. When Mr Xi scrapped his plan to visit Pakistan because of political upheaval there, Indians were relieved. Yet when Mr Xi arrived in India, Narendra Modi, the prime minister, seemed determined to banish suspicion and rivalry in favour of material progress in Sino-Indian exchanges. The relationship between the two men will prove the most important in the region. At home, each leader is confident in his power and expects to remain in office for a long time.
Mr Modi, fond of performances, courted his visitor in Ahmedabad, the biggest city in his home state of Gujarat, with a riverside dinner of 150 vegetarian dishes to celebrate his birthday on September 17th. The development-minded prime minister is looking for foreign capital and technology to boost India’s economy. China’s stock of direct investment of $400m in India is derisory—less than that of Belgium. Talk fills the Indian press of a 250-fold increase, to $100 billion in just a few years. That may be as likely as building a snowman in the Rann of Kutch, but Mr Modi hopes for $20 billion over five years. Mr Xi pledged that Chinese firms would invest in business parks in Gujarat, and corporate leaders announced deals of a few billion dollars. Now comes the task of turning headlines into facts on the ground.
Both sides know that old points of friction are never far away. Bilateral trade, worth nearly $70 billion a year, is less encouraging than it looks. There is a sharp imbalance, since India imports valuable Chinese manufactured goods and exports mainly a few raw materials. India wants China to open up more of its sectors, especially information technology, services and pharmaceuticals.
And then there is public animosity towards China, mainly over a long, disputed border. A poll earlier this year by the Pew Research Centre found that 56% of Indians who were asked considered China a “major threat”. Only Pakistan was a bigger one. When he was in opposition, such animosity was stoked as much by Mr Modi as by anyone.
Attitudes will shift only if China and India fix bitter disagreements, notably over their border. Though swift progress on that is unlikely, measures to manage the discord are possible. As if to prove the need, this week a Chinese incursion was reported into the Indian-controlled part of Kashmir involving hundreds of Chinese soldiers. Once Mr Modi would have huffed angrily about that. This time, both men called for the border to be demarcated at last.
Mr Xi’s visit will lift the bilateral mood. Mr Modi spoke this week of increasing tourist and other travel between two giants that remain atrociously served by transport links. He harked back to shared Buddhist ties and centuries-old pilgrimages by Chinese monks, including to Gujarat. To get more students and tourists flowing between the world’s two most-populous countries should surely be possible. Easier, certainly, than fixing that border.
