Informal meets are more pointed
Trade is a key factor in Sino-india ties. Success has been limited, but India has to keep trying
Gains of the Mamallapuram i nformal s ummit between Prime Minister Narendra Modi and President Xi Jinping were incremental and optical. The most concrete takeaway was the decision to establish a “High-level Economic and Trade Dialogue”, with three intersecting objectives: “To deepen economic cooperation”; to achieve “enhanced trade and commercial relations, as well as to better balance” bilateral trade, and to “encourage mutual investments in identified sectors through … a manufacturing partnership”.
This suggests Modi is having another go at his initial bet, in 2014, to offer China greater market access — provided India genuinely gains from Chinese investments, and provided economic engagement moves beyond a buyer-seller relationship. Separately, Modi hopes to continue to press China for greater market access for products and services where Indian companies are competitive. Recent Chinese permission for an Indian pharma company to bid for a drug-supply contract within their public health system represents a new start, but only a first step.
The Indian PM has worked on these assumptions since he came to office five years ago. Success has been limited, but he has little choice, but to try and try again. True, there is a massive composite power differential between the two countries. In 2000, as the 21st century beckoned, China’s GDP was double India’s GDP. By 2014, it was close to five times India’s GDP; as PM, Modi has maintained the ratio — it has not got worse, but it has not better either.
As its economy matures and exports taper, Beijing faces a demand problem. In this context, Indian consumption, while smaller than the West, is not an insignificant market. That aside the Chinese system has been surprised by the scale of Modi’s victory in the April-may general election. Xi expected to be dealing with a weaker and less sure-footed leader.
All of this may cause China to tweak its approach and treat Modi 2.0 with just that greater bit of understanding. No major shifts are expected; China sees no reason for them. However, on trade and economic relations, where both sides can potentially gain, there remains scope for limited optimism.
At Mamallapuram, the mention of the Regional Comprehensive Economic Partnership (RCEP), the mega-free trade agreement being negotiated between Asean and six major partner countries, was telling. For different reasons both China and Chinasceptics in Asean are keen for India to sign the RCEP agreement.
China eyes the Indian market. This prospect is leading to upheaval in India, where Modi faces pressure from those, including within his government and political system, who legitimately argue that RCEP could virtually amount to a troublesome FTA with China. On the other hand, countries that worry Asia is becoming a onehorse race are concerned that if India opts out RCEP — an ambitious blueprint for Asian economic integration, with potential strategic implications down the line — New Delhi would hand Beijing a long-term advantage.
Modi knows he cannot walk away from RCEP; that would undermine gains of his foreign policy and “Act East” approach. Yet, he cannot wish away the cautionary voices at home either. The terms of India’s entry into RCEP — both in the text as well as using a wider economic and diplomatic metric — could well be dependent on what comfort or space China has offered India in Mamallapuram. This political understanding — or its absence — will likely determine Modi’s big RCEP decision. Not for the first time the closure of a trade issue could come down to a political deal at the highest level.
If this is indeed so, it will validate the reason India first suggested the informal dialogue option to China two years ago. It was an effort to engage with the Chinese leader as an organic politician rather than the chief representative of a political bureaucracy or technocracy, guided at each step by aides, sherpas and minders. The nub was: Could two politicians, the most powerful in their countries in over a generation — Modi chosen democratically and Xi oligarchically — overcome the inertia of their systems for at least some advance? The answer is not overwhelmingly positive, but neither is it conclusive.
Diplomatic engagement goes through cycles. In the post-cold War period, as the European Union expanded and the World Trade Organization was founded, as new trade and related agreements were signed, the salience of delegation-level engagement grew. A principal — whether a prime minister or president — flanked by sectoral specialists and nudged by them; the idea of government as a managerial, non-ideological exercise, meant to disrupt least amid economic growth: This was the consensus.
Today, a shift is discernible. Delegationlevel talks have declined in relative importance. One-to-one, principal-to-principal engagement has gained ground. In meeting after meeting, the “without aides” component is given more latitude than the formal delegation sit-down; and for two reasons.
One, Big Politics is back on the international stage. Political deals, calls, even grandstanding have a greater policy autonomy than say 20 years ago. Two, this is an era of defining shifts both within countries and in the international system. Societies have responded by electing or selecting strong leaders, empowered by popular will or domestic elites. The chosen individuals are reflective of long-term social processes at home. From India to China, from Saudi Arabia to Japan, from Trumpism to Brexitism, there is an attempt to understand a country’s evolution by understanding this “special” leader’s impulses. Seen through this prism, the Mamallapuram informal summit reflects a global pattern.