Chinese Premier visits India. So?

What should we make of Li Keqiang's recent visit

Jasodhara Banerjee
Published: 24, May 2013

I have an assortment of interests and, hence, subjects to write on. International relations, especially in South Asia, is one of the more ‘serious’ ones. You can find the ‘lighter’ stuff, if you flip through ForbesLife India magazine and the ‘Life’ section of Forbes India

Chinese Premier Li speaks with the media as India's PM Singh looks on during the signing of agreements ceremony in New Delhi
And the conversation continues...(Photo: Adnan Abidi / Reuters)

So, the Chinese Premier, Li Keqiang, has come and gone. And the world is pretty much what it used to be.

But should we expect it to be otherwise? Perhaps not.

Li’s visit was accompanied by the usual headlines, with the expected tone: ‘Chinese premier bats for balanced trade with India’; ‘How Chinese Premier Li’s visit will boost TCS’s business in China’ (the copy of course said “may further boost”). A more realistic one was: ‘China’s Premier tries to make friends in India’.

There has been also, of course, the usual round of alarm bells from the usual bell towers: One asked for China’s latest incursion to be viewed within the context of their “long history of imperial arrogance”; another column called it ‘China’s Land Grab’.

The concerns that India has with China remain: A balance of trade heavily in favour of China ($1.83 billion), and, of course, our 57-year-old border dispute. What Li said to assuage India’s concerns also remains pretty much the same (like earlier premiers): That India and China can grow and develop together; that there is potential for the countries to cooperate; that they should, and can, have closer relations.

In concrete terms, what was achieved? A $1 billion debt-for-fuel deal between China and Essar Energy PLC Ltd, and smaller deals worth $500 million. And nothing on the border issue.

So what do we make of this visit really? Perhaps a PR exercise for the newly appointed Chinese Premier. Smile-and-wave-we-come-in-peace visits to the neighbours.

Bilateral trade between the countries has often been touted as growing to landmark levels—reaching the $100 billion mark by 2015 has been held as a glowing sign of prospering trade for the past few years. At present, bilateral trade is worth $75.6 billion. India largely exports ore, slag and ash, iron and steel, plastics, organic chemicals and cotton to China, while importing electrical machinery and equipment, nuclear reactors, machinery, boilers, cement, silk and mineral fuels.

If you compare India-China trade figures with the total volume of foreign trade of each country (India: $795 billion; China: $3.82 trillion) it comes a cropper. More so, if you compare China’s foreign trade with the EU ($546.04 billion), the US ($484.68 billion) and Japan ($345 billion).

Bilateral trade, and its apparent flourishing, has also been touted as the magic wand that will improve political relations between India and China. The argument being, if you are doing good business with someone, you are likely to make efforts to be on friendly terms. If that was the case, China and the US should be bum-chums, but last we knew they were hardly on speaking terms; Japan and China should be partying together, but, most likely, they have de-friended each other on Facebook; also, China and BFF Pakistan should be making fantastic amounts of money doing business, but in reality they’ve just made it past $12 billion.

And now for the border issue. Will China attack us? We seem to have lived in mortal fear of being “encircled” by China for the past 50 years. And seem to have done little apart from living in mortal fear.

But will they attack? Let’s see: Doesn’t China have enough problems of it own? Its economy is losing its pace; it has an ageing population that is slowing down their ‘demographic dividend’; wages are going up (they will have to if China has to keep labour happy and away from thoughts of unrest) and the likes of Apple will not blink before moving to cheaper countries; it is under increasing international scrutiny over human rights, factory working conditions, corruption and pollution.

Is this when a country attacks another? Perhaps yes, if the government has to distract the attention of its people from these very problems and focus on an external enemy, usually to win the next election. China does not have elections. It does not need to distract its population. It needs to keep them employed, well-paid, and calm.

So what was the whole Aksai Chin incursion about? Perhaps to signal this very point: That nothing really has changed. China still claims what it did all these years, and a friendly, neighbourly visit has little to with it. As does trade.

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