Asia Politics

India, China leaders talk trade and not territorial dispute

Key Points
  • During a Saturday summit in India, Chinese President Xi Jinping and Indian Prime Minister Narendra Modi apparently did not discuss a territorial dispute, instead focusing on trade relations.
  • "It seems like what the two leaders have done is try to set some of the thorny political issues to the side," said Dhruva Jaishankar, director of the U.S. Initiative at the Observer Research Foundation.
  • But trade cooperation will be on a case-by-case basis as India has some of the same concerns in working with China as Washington has cited, said Jaishankar.
Chinese President Xi Jinping shakes hands with Indian Prime Minister Narendra Modi to the G20 Summit on September 4, 2016 in Hangzhou, China.
Lintao Zhang | Getty Images

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi avoided the topic of a territorial dispute and instead pushed forward on trade relations during their summit over the weekend.

As the leaders of the world's two most populous countries met in the coastal town of Mamallapuram in southern India, they sidestepped what could have been another quarrel over disputed territory. Ahead of the summit, Chinese state media reported Xi would support Pakistan in the dispute over Kashmir — a territory also claimed by India.

But Reuters reported Xi did not discuss Kashmir with Modi on Saturday, and instead they mostly discussed issues of trade and investment.

"It seems like what the two leaders have done is try to set some of the thorny political issues to the side," said Dhruva Jaishankar, director of the U.S. Initiative at the Observer Research Foundation.

Indian school students wear masks of China's President Xi Jinping in Chennai on October 10, 2019.
Arun Sankar | AFP | Getty Images

Indian leaders have made it very clear that the country is open to collaborating with China, Jaishankar said. But that cooperation will be on a case-by-case basis, as India has some of the same concerns in working with China as Washington has cited, he said.

For example, the trade deficit between India and China stands at $53.57 billion in Beijing's favor — the largest imbalance New Delhi has with any country. Still, that towering figure is down from $63.05 billion a year ago. Following the summit, Reuters reported that Indian Foreign Secretary Vijay Gokhale said Beijing will look at ways to trim its trade deficit with New Delhi.

Xi and Modi may have recognized that the ties between Beijing and New Delhi are "below potential," Jaishankar said. As the U.S. and China try to resolve their protracted trade war, Xi and Modi may hope to establish a more stable relationship amid global uncertainty.

"So we have seen an increase, for example, in Chinese investment in India, not just greenfield investment but also portfolio investment, including in the tech sector, quite significantly, and then more by the Chinese private sector companies rather than state-owned enterprises," said Jaishankar.

New Delhi is working together with Beijing in battling climate change, but in defense and education, Jaishankar said, there's a "natural alignment" for India and the U.S.

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Key Points
  • Chinese President Xi Jinping and Indian Prime Minister Narendra Modi will be meeting in the coastal town of Mamallapuram in southern India starting Friday.
  • "India and China have a fraught relationship, yet they are also far from being each other's top foreign policy issue," says Simon Baptist, global chief economist and managing director at the Economist Intelligence Unit.
  • Another point of contention between the two countries is China's the Belt and Road Initiative (BRI) — an ambitious infrastructure project that seeks to connect dozens of countries in Asia, Africa and Europe.
  • India has consistently snubbed China's invitations to join the BRI.