China-India deals

As the Pakistan government has upped the ante against India over the past few weeks after the signing of $45 billion worth of MoUs with the Chinese government, the Chinese have agreed 26 economic cooperation deals with India. Indian Prime Minister Narendra Modi signed off business deals worth over $22 billion in his recent visit to Beijing. The two countries agreed to strengthen bilateral ties as well as ease tensions over their border dispute. Reportedly, $20 billion of the investment will be to build infrastructure in India while a $2.5 billion Chinese loan has been agreed for Bharti Airtel. The agreements with the Indian cellular service operator fall in line with the Chinese practice of financing projects overseas that benefit Chinese companies. Airtel has been outsourcing equipment from Chinese manufacturers. India and China also signed a joint accord on climate change, where they made commitments to introducing renewable energy. Other agreements include steel, solar, ports, telecommunications, entertainment, railways, mining and space exploration. The deals also allowed Indian software companies Wipro and Infosis to open new business spaces in China while ICICI bank was allowed to open a branch in Shanghai. The two countries are also set to be the biggest shareholders in the Asian Infrastructure Investment Bank (AIIB), which is set to challenge the IMF, World Bank and ADB nexus in global finance.
The key difference between the Chinese agreements with India compared with the agreements with Pakistan is that India-China cooperation will open the space for Indian companies to invest in China. No such agreement was reported during the Chinese president’s visit to Pakistan. At the time the Pakistani leadership congratulated the nation and patted themselves on the back over the fact that the exclusive agreements with China represented the culmination of a ‘unique friendship.’ Chinese President Xi Jinping also played up the same tune. We need to understand that China is a major regional power looking to consolidate its position. The critical difference, however, is that India has signed agreements that will benefit both countries. The agreements with Pakistan are much more unilateral, in favour of the bigger partner. Pakistan faces another question: what will increased Chinese and Indian cooperation in the region mean for us? China and India have been wary of cooperating with each other due to competing interests in the region and longstanding border disputes. Both have designs to become global superpowers. The Pakistani establishment has long operated on the understanding that the two regional powers will not be able to resolve their differences. Now, the Confederation of Indian Industry has come out to fully back the deals. The interests of big business in both countries require that they access new markets. However, the Indian National Security Advisor Ajit Doval has warned that India needed to remain on alert before its border disputes with China were resolved. The deals require Pakistan to re-evaluate its regional politics. China is clearly not troubled by Pakistani accusations that India is out to scupper cooperation between the two. One only needs to look at the wide array of agreements with India to understand why.