China will pledge to invest billions of dollars in India’s rail network during a visit by President Xi Jinping this week, bringing more than diplomatic nicety to the neighbours’ first summit since Narendra Modi became Indian prime minister in May.
The leaders of Asia’s three biggest economies – China, India and Japan – have crisscrossed the region this month, lobbying for strategic influence, building defence ties and seeking new business opportunities.
Beijing’s bid to ramp up commercial ties in India follows a pledge by Japan to invest $35 billion (R385bn) in India over the next five years, including the introduction of bullet trains, and a drive to deepen security ties during talks earlier this month between Modi and Prime Minister Shinzo Abe in Tokyo.
India and China are expected to sign a pact that will open the way for Chinese participation in the new rail tracks, automated signalling for faster trains and modern stations that India’s British-built rail system desperately needs, having barely added 11 000km of track in the 67 years since independence.
China, which added 14 000km of track in the five years to 2011, is also pushing for a share of the lucrative high-speed train market in India, saying its technology would be cheaper than Japanese proposals.
“India has a strong, real desire to increase its co-operation with China and other countries to perfect and develop its rail system, and has concrete co-operation ideas,” China’s Assistant Foreign Minister, Liu Jianchao, said.
“India is considering building high-speed railways, and China has a positive attitude towards this.”
China’s consul-general in Mumbai, Liu Youfa, told the Times of India last week that Chinese investment in the modernisation of India’s railways could eventually touch $50bn.
Beijing is looking to invest another $50bn in building Indian ports and roads and a project to link rivers, part of an infrastructure push that Modi has said was his top priority to crank up economic growth.
Chinese investment will also help narrow a trade deficit with India that hit $31bn last year.
From economic parity in 1980, China’s growth has outstripped India’s fourfold.
Beijing is now seeking to recycle some of its vast export surpluses into foreign investment in resources and infrastructure in south Asia to feed its industrial machine.
Xi will kick off his visit in Ahmedabad, the commercial capital of Modi’s home state, Gujarat, on Wednesday.
Xi is set to launch one of two industrial parks focused on building power equipment in the booming state. – Reuters