Chinese President Xi Jinping’s visit to New Delhi this week, his first to India in seven years, should further the diplomatic thaw between the giant neighbours, but there are few signs as yet that their business ties will improve.
Businesses in both countries continue to face hurdles, including investments stalled by regulations, visa delays and restrictions on industrial equipment, underlining the gap between diplomatic progress and economic ties, analysts say.
China’s foreign ministry has confirmed Xi will be in Delhi this weekend for the annual BRICS summit, but there is no word yet if he will have a bilateral meeting with Indian Prime Minister Narendra Modi, which will be crucial to set the future direction of bilateral ties. China and India fought a brief war in 1962, setting the backdrop for a wary relationship since then, which soured after a 2020 border skirmish killed 20 Indian and four Chinese soldiers. Still, ties have improved in recent years, especially since Modi visited China last year and as both nations grapple with volatile relationships with the US.
“China certainly wants to improve ties, but we are waiting to see to what extent India is actually willing to improve them,” said Lin Minwang, a South Asia expert with Shanghai’s Fudan University and former diplomat at the Chinese Embassy in New Delhi, suggesting that any dramatic progress was unlikely. Harsh Pant, vice president at New Delhi’s Observer Research Foundation think tank, said the “trust deficit” between the countries was high.
He added: “China has economic heft and there is a good opportunity to use that and emerge as a reliable partner, especially when both nations are impacted by America’s trade policies.”
In March, India eased some of the restrictions on Chinese investment that it imposed following the 2020 border clashes, focusing on electronics, capital goods and solar cell sectors. It is also considering faster approvals for joint ventures between Indian and Chinese firms in some industries. New Delhi has since approved a few significant projects, including a manufacturing venture between India’s Dixon Technologies and Chinese smartphone maker Vivo Mobile.
But that has not been enough to attract back leading Chinese companies like vehicle makers BYD and Great Wall Motor, which shelved planned investments in India after facing heightened scrutiny by New Delhi, according to an Indian government source. Great Wall Motor and BYD declined to comment. Chinese companies’ proposed investments in India are facing more scrutiny from Beijing itself, including in sectors where sophisticated manufacturing and high-end technology may be involved, the source and another person said, both requesting anonymity as they were not authorised to speak to the press.
China’s foreign ministry told Reuters that Xi and Modi, who briefly met this month at a regional forum in Kyrgyzstan, think the two countries are “partners, not competitors, and they represent opportunities, not threats, for each other’s development”. India’s trade and foreign ministries did not respond to requests for comment. New Delhi has declined to approve a proposal by Alipay, a platform related to China’s Ant Group, to be linked to India’s instant payments system, citing national security concerns, Reuters reported last week. The Indian government is also considering a recommendation by its Serious Fraud Investigation Office (SFIO) that Chinese cellphone maker Xiaomi be investigated for alleged irregularities in its business in India and breach of foreign investment laws, Reuters has reported. Xiaomi said it complies with all local laws and has not received any communication from the SFIO.