Gypped by Xi: Where is the $100 bn that China promised India?

Chinese President Xi Jinping’s India visit (17-19 September) has not gone off as well as it could have. The two sides could have made it into a roaring success which it isn’t.

Forget about the promised $100 billion Chinese investment which was to be pledged during Xi’s India visit but did not materialize. Forget about Xi’s sweet talk of India and China being two bodies in one spirit but saw a starkly different ground realities as demonstrated by Chinese incursions into India were starkly different.

Xi’s India visit would be best remembered for the Chinese incursions rather than the 16 bilateral agreements India and China signed at the national level, apart from three agreements signed at the state level involving Gujarat, the home state of Prime Minister Narendra Modi.

The biggest USP of Xi’s India visit, even before it began, was meant to be the India-China camaraderie in the economic arena with the Chinese promise of pumping $100 billion worth investments into India in the next five years, almost thrice the amount pledged by Tokyo conveyed during PM Modi’s recent visit to Japan.

This mammoth investment figure was announced by Liu Youfa, China’s consul-general in Mumbai.

Liu was quoted by the Times of India on 13 September as stating thus: “On a conservative estimate, I can say that we will commit investments of over $100 billion or thrice the investments committed by Japan during our President Xi Jinping’s visit next week. These will be made in setting up of industrial parks, modernization of railways, highways, ports, power generation, distribution and transmission, automobiles, manufacturing, food processing and textile industries.”

But that promise did not fructify. All that India got during Xi’s India trip was just over $30 billion, much less than the $35 billion investment pledge made by Japan.

In concrete terms, one of the 16 bilateral agreements China signed with India during Xi’s maiden visit to this country was a five-year trade and economic development plan agreed to by the two sides’ commerce ministries wherein China committed an investment of $20 billion in India over the next five years.

China has also committed an investment of $6.8 billion in its two industrial parks in Gujarat and Maharashtra.

Over and above that 24 Chinese companies have sewn up investment contracts with Indian companies worth $3.6 billion.

All this put together comes to $30.4 billion of Chinese investment pledges in India for the next five years, if it comes. This is far less than the $35 billion investment Japan pledged to India over the next five years.

The Chinese side is learnt to have orally conveyed their commitment to invest $20 billion in India every year for the next five years, thus bringing up the $100 billion investment figure. But these are only oral pledges.

Xi’s India visit has ended up as a bit of a dampener for India. While the promised $100 billion investment money did not show up in concrete terms, the visit was marred by the third and latest Chinese incursion into Chumar in Jammu and Kashmir’s Ladakh region.

Significantly, the Chumar stand-off was resolved shortly after the Modi-Xi talks, conveying a loud and clear political message to the Modi government.

It will take some time to figure out why Xi did not live up to the $100 billion investment publicly touted by the senior Chinese diplomat.

It is possible that Xi may have decided to hold his horses at the last moment in view of President Pranab Mukherjee’s highly significant Vietnam visit which produced two crucial India-Vietnam agreements in the fields of oil exploration and defence just before Xi set foot in India.

In any case, the strategic content of the visit was a big let-down as demonstrated by the Chinese incursions which were alive till the time Xi held talks with Modi. Two of the three Chinese incursions are still alive.

This only shows that Asia’s number one and number three economies – China and India, respectively – still continue to grapple with a huge trust deficit.

Xi’s India visit should have addressed this vital issue, but it did not. Thus, overall Xi’s India visit has proven to be a much-hyped event which is actually nothing more than a flash in the pan.

*The writer is FirstPost Consulting Editor and a strategic analyst who tweets @Kishkindha.