Chinese President Xi Jinping will lay the groundwork with Indian Prime Minister Narendra Modi, for enormous Chinese investment.
China is all set to pledge investments of billions of dollars in India this week. And this all comes at a time when Asia’s balance of power is in changing mode.
The wave of Chinese money to build industrial parks and bullet trains in a country hungry for development and a sudden sharp rise in China’s interest in investing in India is primarily caused by its rivals Japan and the US interest in India’s new government development initiatives. China definitely sees an opportunity in engaging India at this point.
India has been always wary of China due to as two countries fought war in 1962 and the Himalayan border in dispute. At the same time, India needs investments to achieve its goals of improving the country’s infrastructure and making India a manufacturing hub.
So far India has strategically gained from the competition among China, Japan and the U.S.
India and Japan have agreed to build a strategic partnership with a promise of $35 billion in investment over five years. China is also looking for a similar role which will be discussed during President XI Jinping’s visit to India.
Shortly after Chinese Premier’s visit Prime Minister Mr. Modi is scheduled to visit the US to discuss cooperation in defense and energy sector with the U.S.
India’s two-track China policy is being finalized; through which it makes it easy for Chinese money to come in. Where in Chinese companies can set up its manufacturing facilities here to manufacture and sell its products to Indians locally and foreign consumers through exports. Which will eventually; help narrow the country’s $30 billion-plus trade deficit.
Currently Chinese investment in the country is about $400 million, behind $16 billion cumulative investments from Japan.
Immediate announcements of investment of $5 billion in two industrial parks in Gujarat and Maharashtra respectively and deals for bullet trains are expected.
It will be interesting to see that how far China and the US go; after Japanese announcement of investment in the Indian growth story worth $35 billion; not to forget it is Russia’s turn once Mr. Modi’s America trip is over.