China’s assessment of Trump-Modi meet

Author: 
Subrata Majumder

The Atlantic Council, a top US think tank, urged President Donald Trump to prioritize its ties with India to counter Beijing’s growing influence, in a paper, “Transforming India from a balancing to leading power’. Despite this, China was upbeat on Modi-Trump summit before the meet. China’s leading media Global Times hogged with surprise, saying “China could benefit from Trump-Modi summit”. The think tanks and analysts were bogged down by suspense with the Chinese overtone.
The Chinese media chanting on the summit was, however, not baseless. Any dispensation from Trump’s hardline approach for ‘America First’ to India would eventually prove benign to China, the media believed. China’s unexpectedly positive reactions on the summit were polarized on two factors. First, Trump’s America First policy approach was expected to mount pressure on India to open the market accessibility for US goods. Resultantly, this would have positive bearings on the entry of Chinese goods in India. China is the biggest trade partner of India. Several barriers, including tariff and non-tariff, are obstructing Chinese trade opportunities in India.
Second, China hoped for dilution in the HI Visa in the Modi-Trump summit. The relaxation could help China, since a large number of Chinese immigrants are using this visa gate to enter USA.
But, the Joint Statement belied the visa hope. Instead, it asserted on market accessibility exercises. The Joint Statement categorically prioritized USA and India to “undertake a comprehensive review of trade relations with a goal for expediting regulatory processes and increasing marketing access”.
USTR highlighted six major barriers in Indo-USA trade. They are import licensing, standard, testing, labelling and certification, Anti-dumping and countervailing measures, export subsidies and domestic supports, government procurement and service sector barriers.
According to Indian officials, some of these concerns were being addressed and custom procedures would fall in line with the Trade Facilitation Agreement. Government procurement is being addressed, aligning with Make in India campaign.
Government procurement has been reinvented, with an eye to push Make in India. The Ministry of Urban Development made it mandatory to procure railway equipment for metro projects from domestic sources. According to the policy, a minimum of 75 percent of metro coaches and critical signaling equipment are to be procured from domestic sources by the Central and State level metro project authorities.
Currently, no domestic company is manufacturing metro coaches. All four manufacturers in the country are foreign investors.  Chinese state-run company China Railway Stock Corporation (CRSC) has decided to set up manufacturing facilities for metro rail coaches and equipment in Nagpur.
Both Modi and Trump pledged for a strong defence and security cooperation, treating India a major defence partner in the joint statement. This was a significant takeaway for Modi to boost Indo-US relation, which recognized India a bellwether for US military influence In Asia –Pacific regime. Earlier, India figured a key role player in USA’s Pivot Asia policy during Obama administration. The outcome of the Modi-rump summit proved an acceleration in Indo-USA relation, against the Trump’s mystique of negating Obama’s Pivot Asia policy.
Trade relations between India-USA and Sino-India are diagonally opposite to each other. While India has trade surplus with USA, it has trade deficit with China, with higher magnitude. The unbalanced trade relation between India-USA and Sino-India pitched for different strategies to woo foreign investors. While India woos American investors for advancement of technology and innovation, it urges China to invest to counterbalance the trade deficit. 
China is emerging a big ticket investor in India. In 2015, Chinese investment in India leapfrogged eight times and became the eighth biggest foreign investor in India. During 2016, Chinese companies proposed US $ 2.3 billion worth of investment in the country.
One of the main reasons for the wide trade balance between India and China is the large import of electronic good. Import of mobile phones is the key driver for electronic items imports. With the Chinese currency yuan appreciating high, the imports of Chinese mobile turn expensive. This led China to make big investment in mobile manufacturing in India.  
More than half a dozen mobile manufacturing companies are from China. Just before Chinese telecom giant Huawai announced shifting of its plant to India, Xiami had revealed plan to set up two manufacturing plants in the country. Upstart brands like Goinee, LeECo, Oppo, Vivo, Meizu, One Plus and Coolpad have also announced their facilities in the country.
In the Joint Statement, both Trump and Modi pledged for deepening defence cooperation, recognizing India as a ‘major defence partner’. The emphasis was for working together for advanced defence equipment and technology. This was a significant takeaway for Modi to woo the US investors in defence, which was largely opened for the foreign investors during his regime.
Foreign direct investment has ballooned during Modi tenure. With the summit extrapolating an upturn in the Indo-US relation, foreign investment from USA is likely to surge, given the Indian side ensuring to address the trade and investment barriers.
The important point of US President Donald Trump is his inconsistency. He is unpredictable and naïve in diplomacy. Even though his isolationist policy “ American only“ was the driving force to let  him win the unexpected battle of election, his warm greetings and roll out of red carpet to Modi, treating him a good friend will further advance Indo- US relation, which was built during the three years period of Obama regime.
Before election, according to Global Times, Trump will pay little attention to Asia Pacific, unlike Obama and Hillary Clinton, in the wake of his assertion on ‘America only’. This may prove benign to India-China economic relation.
Therefore, the summit has trilateral impact on Indo-US-China relation. Interestingly, the upturn in Indo-US relation is unlikely to impact the Chinese binge in investment in India or growing Sino-India economic trade relation. (IPA/Views expressed in the article are those of the writer and not necessarily shared by IPA)

Thursday, 6 July, 2017