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READING LIST

MARCH 2015 ISSUE

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Force Magazine
Guest Column - Force Magazine
Smart Moves
Prime Minister Narendra Modi faces the challenge to tactfully manage strategic relations with both US and China without upsetting either
 
Kanwal Sibal
By Kanwal Sibal

Prime Minister Narendra Modi has been quick to court both the US and China. His first overtures were to China, prompted no doubt by his several visits there as chief minister of Gujarat, Chinese investments in his home state and his general admiration for China’s economic achievements.

Beyond this personal element, many in the government and corporate sectors in India believe that our politically contentious issues with China, especially the unresolved border issue, should be held in abeyance and that economic cooperation with that country should be expanded, as India can gain much from China’s phenomenal rise and the expertise it has developed in specific sectors, especially in infrastructure. It is also believed that China, which is now sitting over USD 4 trillion of foreign exchange reserves, has huge surplus resources to invest and India should actively tap them for its own developmental needs. In this there is continuity in thinking and policy from the previous government, with Modi, as is his wont, giving it a strong personal imprint.

The first foreign dignitary to be received by Modi after he became Prime Minister was the Chinese foreign minister, representing the Chinese President. This was followed up by his unusually long conversation on the telephone with the Chinese Prime Minister. Our Vice-President was sent to Beijing to celebrate the 60th anniversary of the Panchsheel Agreement even though China has blatantly violated this agreement and India’s high level diplomatic endorsement of it only bolsters Chinese diplomacy, especially in the context of China-created tensions in the South China and East China Seas. Modi had an opportunity to meet President Xi Jinxing at the BRICS summit in July 2014. This was followed up by the Chinese President’s state visit to India in September 2014, during which the Prime Minister made unprecedented personal gestures to him in an informal setting in Ahmedabad.

The dramatics of Modi’s outreach to the Chinese aside, his objectives in strengthening economic ties with China, essentially imply a consolidation of the approach followed in the last decade or so, with some course correction here and there. In this period, China made very significant headway in our power and telecom sectors, disregarding obvious security concerns associated with China’s cyber capabilities and the links of Chinese companies to the Chinese military establishment. Many of our top companies have tapped Chinese banks and financial institutions for funds, and this has produced a pro-Chinese corporate lobby in our country. This lobby will obviously highlight the advantages of economic engagement over security concerns.

Smart Moves

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