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Sieren's China

Frank Sieren / sbSeptember 23, 2014

Chinese President Xi Jinping's visit to India shows that economic cooperation will allay political tension and competition between the two largest Asian rivals, writes DW columnist Frank Sieren.

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Xi Jinping and Narenda Modi sit on a loveseat
Image: picture-alliance/AP/Press Trust of India

It's one way to celebrate a birthday: starting off with a walk along the banks of the Sabarmati River in west India and then throwing a dinner in a traditional tent, attended by the head of the Chinese state and Communist Party Xi Jinping. This is how Indian Prime Minister Narendra Modi celebrated his 64th birthday last week. What Xi gave Modi as a gift was not made public, but what the two agreed upon for the next few years can be viewed as a small success for Modi's political ambitions.

China's advantage over India

In meetings over the past years between the top leaders of the two most populous countries of the world, starting points have been clear: China, with its one party dictatorship, is ahead of democratic India by at least a decade when it comes to basic living conditions.

In India, according to figures from last year, 17 percent of the population didn't have enough to eat. In China it was only nine percent. In China, five percent of the population cannot read or write. In India, 19 percent is illiterate.

The life expectancy in India is on average 66 years. Chinese can now add ten years to that.

But economic reformer Modi wants to catch up. That's why he was elected. He has the largest government majority since 1984 - that is a good starting position to improve the situation of his country.

China plays an important role in Modi's plans. Even now, it is India's most important trade partner. Around 65 billion dollars worth of goods are traded annually. This volume is set to rise to 100 billion dollars by the year 2015. The two neighbors want to work more closely on projects in finance, infrastructure and trade. The Chinese credo is - as it is in many other parts of the world, investment in the development of a country can defuse potential conflicts.

China invests in India

And so Xi shook hands with his counterpart many times last week. Agreed in a series of contracts, China will increase its investment in projects in India's industry and infrastructure to 20 billion dollars over the next five years. The contracts signed include two new industrial parks, the expansion of the rail network and even joint projects in aerospace.

India wants to follow its neighbor's successful economic example. In other words, India wants to place more emphasis on exports. India's share of world trade is expected to increase by 50 percent, in line with Modi's motto: sell everywhere, but produce here. But even if India accomplishes that goal, the country still lags hopelessly behind China. In 2013, China exported around two trillion worth of goods. India, by comparison, exported 330 billion dollars worth.

China must open up to India more

This is something China is also responsible for and a point that was criticized by Modi in talks with Xi. The Chinese market, which is closed to many Indian products, created a trade deficit in India of 169 billion dollars between 2007 and 2013. Xi promised to make improvements here: in future, India will be able to export more products, such as pharmaceuticals, for example, to China. Where the Chinese economy is hurting, it is best to take a step towards India.

It was obvious that both Xi and Modi were striving for harmonious talks. Because there is already enough tension between the two Asian rivals. China, for example, is upset that India continues to grant exile to the Dalai Lama, though his followers do not receive permanent visas.

Frank Sieren
DW columnist Frank SierenImage: Frank Sieren

There is also military competition between Delhi and Beijing. Buying arms, India tries to compete with China's military might. India thus imports more military equipment than any other country, but China only increased its military spending this year. And India views with skepticism investments by Chinese companies in Sir Lankan ports and Pakistan. Shortly before his trip to India, Xi Jinping visited a port in Sri Lanka that Chinese companies are building. Delhi sees in this investment a strengthening of China's control over sea routes around India.

Reconciliatory words despite provocations

For decades, the two have been at odds over the exact boundaries of their shared 3,500-km border. At first, an incident that happened to occur during the Chinese president's visit may have reminded some onlookers of the Ukrainian conflict: according to Indian media reports, 1,000 Chinese soldiers crossed into Indian territory and tried to build a street. Xi tried to use reconciliatory words after the provocation during mutual talks. And subsequently, Modi was also optimistic that a solution would be found.

No wonder, because it is in the interest of both sides to not harm this rather young, blossoming partnership. And especially here, both feel reinforced after the latest meeting: by no means do the Chinese dragon and the Indian elephant want to drift apart. Instead, they want to profit from each other. And it can only be good for Asia as a whole if another powerhouse develops to counterbalance China.

DW columnist Frank Sieren is an expert on China and has lived in Beijing for 20 years.