Modi Moment

Yu Lintao

As two of the largest developing countries in Asia, China and India are frequently mentioned in the same breath. China is the world's most populous country, while India the second. Mumbai is often compared to China's most renowned commercial hub-Shanghai. Now, when the Bharatiya Janata Party (BJP)'s Narendra Modi, who is known for his talent for economic development, sweeps into office as India's prime minister, media are hoping he can help change India in the way Deng Xiaoping changed China. Ordinary Indians and business leaders have huge expectations of what Modi will be able to deliver to their country. The BJP leader pledged to end policy paralysis, reduce inflation and tackle corruption during his campaign, but some of the toughest hurdles still lie ahead. It seems much easier for the new Indian prime minister to propose such exciting policies than change everything.

Boosting growth
For Modi, who has accrued a wide range of skills in developing the economy in Gujarat, India's fastest developing region, it is reasonable to assume he knows clearly what he has in mind when it comes to handling the current predicament of Indian economy.

Based upon Modi's political career, observers speculate that increasing international cooperation to speed up the development of the Indian economy would be a pivotal move for Modi. As India shares similar national conditions, Modi has shown great interest in China's crusade to transform its economy. Some observers suggest Sino-lndian economic cooperation might see a new high during the Modi administration.

Despite the fact that India has undergone around two decades of relatively swift growth, the prospect of a government led by Modi has boosted Indian stocks by more than 15 percent so far this year. However, the new Indian prime minister still faces the difficulties presented by the huge and diverse country that India is and its extreme inequities, poor infrastructure, and the increasing rural and urban divide.

Data concerning the Indian economy released by global economic organizations are even more alarming. India ranks 60th in the world on the World Economic Forum's 2014 ranking of countries and regions by competitiveness. China's mainland was 29th, while Taiwan and Hong Kong came 12th and 7th respectively. Switzerland came out on top.

Considering the ease of doing business, the World Bank ranks India 134th in the world, while it comes in at only 179th for business opportunity.

The win for the BJP during the general election this time round was mainly on the back of Modi's outstanding performance in developing Gujarat's economy, said Hu Shisheng, Director of the Institute of South and Southeast Asian and Oceanian Studies at the China Institutes of Contemporary International Relations (CICIR).

With Modi using his economic policies as a trump card during the campaign, promoting economic growth will certainly be the focus of his administration, Hu commented. Economic ties between China and India could enter a new phase with the help of Modi's admiration.

According to Hu, manufacturing and infrastructure are the priorities for Sino-lndian cooperation, as they can help the new administration increase employment and improve living standards.

Tang Lu, a senior researcher on world studies at Xinhua News Agency, also noted that Modi personally takes a positive view of China. "The story of China's rapid development might be a motivation for Modi when he served as Gujarat's chief minister. He said he hoped Gujarat can grow as fast as China's Guangdong Province," said Tang.

It is widely believed that Modi has close connection with China. Modi visited China four times when he was in charge of Gujarat for meetings on cooperation and how the two countries might best pool their knowledge. He was also known for celebrating the Chinese Spring Festival in Gujarat as a gesture of Sino-lndian friendship.

Most of the more than $900 million of Chinese investment in India has been made in Gujarat. The Indian media reported recently that a Chinese business delegation of about 20 corporations would visit Modi's hometown Gujarat in June for business opportunities with an intention to invest $1 billion in the state this year.

In an interview with Xinhua, Arvind Subramanian, a senior research fellow at the Peterson Institute for International Economics, a US think tank, said Modi wishes to learn earnestly from China's efforts and has a deep appreciation for China's administrative efficiency. It is possible India will follow a Chinese way in economic governance during Modi's term.

Ravi Agrawal, CNN's New Delhi Bureau Chief, also said in a CNN commentary titled What India Can Learn From China that "China gets things done; India invents ways not to," and that the reason why it's fascinating to watch the rise of Modi is that his sales pitch is that "he gets things done."

Cementing bonds
In a recent press release by the Indian Embassy in Beijing, Indian diplomats told reporters that in Modi's first telephone conversation with Chinese Premier Li Keqiang after taking office, he hailed China as India's foreign policy priority. Modi welcomed greater economic engagement between the two countries. He has also expressed his desire to utilize the full potential of India's strategic and cooperative partnership with China.

Observers speculated that the prime task for Modi will be reviving the currently sluggish Indian economy. To do this, he will probably piggy-back on the momentum of the previous Indian Administration's relations with China to attract more Chinese investment.

Ma Jiali, another researcher with the CICIR, said Modi's victory will mean closer economic ties between China and India, which conform to the Indian prime minister's aspirations and India's current needs.
Ma said Modi attached great importance to infrastructure construction when he was chief minister of Gujarat. Poor infrastructure presents itself as a formidable obstacle for the economic development of India as a whole.
"It is very possible that Modi will introduce the knowledge he gained working in Gujarat to the whole country. This means bigger Sino-lndian cooperation opportunities in India's infrastructure construction as China has huge advantages in the field, including technology, expertise as well as funds," said Ma.

In fact, over the past two decades, the economic developments of the two countries have had different focuses. China is known as the "factory of the world" for its manufacturing edge while India's service industry has provided it with most of its growth.

Chen Lijun, a researcher on South Asian studies with the Yunnan Provincial Academy of Social Sciences, said the different economic structures of the two countries helped to create a complementary environment for further cooperation of the two though trade imbalance also exists.

Chen noted that the increasing of mutual investment can be a good approach to reduce the trade imbalance. China should increase its investment in India while India needs to open its domestic market further, which benefits both, added Chen.

Chinese observers generally believe Sino-lndian relations will remain stable under the Modi administration. However, there are also those who worry that these relations may meet obstacles if Modi plays up the Tibet issue.

After Modi won the general election, the Dalai Lama sent a message of congratulations to him. Modi expressed his thanks to the Dalai Lama through Twitter. Tibetan separatists have also publicly celebrated the close personal "friendship" between Modi and the Dalai Lama. On May 26, India invited the head of the so-called "Tibetan government-in-exile" to attend the inauguration ceremony of the new prime minister.

Some observers believe Modi's attitude toward the Tibet issue could potentially ruffle China's feathers, adding unwanted trouble to their relations.
[source : Beijing Review, June 12, 2014]

Frontier
Vol. 47, No. 5, Aug 10 - 16, 2014