China all set to outplay Japan in investing in India
Cash-rich China is looking to outwit rival Japan by pledging to invest billions of dollars in India's railways, manufacturing and infrastructure projects during President Xi Jinping's maiden visit to the country this week.
As Xi's visit to India scheduled for 17 September draws close, Chinese officials are becoming increasingly vocal about Beijing's decision to scale up investments in India regarded widely as the most safe investment destination, especially after Japan made a splash with commitment to invest $35 billion during Prime Minister Narendra Modi's visit to Tokyo.
With growing outbound direct investment (ODI) which last year crossed $90 billion, China's investments in India, which so far remained a paltry $400 million, mostly in Gujarat, are now expected to surpass Japan.
China's foreign exchange reserves, the largest in the world, reached a record $3.95 trillion in March and it plans to invest around $500 billion overseas in the next five years, a large share of which is expected to find India's way.
China is positively considering investing in India's ambitious plan to build high-speed railways, including bullet trains. Chinese officials say that China would be committing anywhere between $100 billion to $300 billion in the modernisation of Indian railways by replacing existing tracks to increase the speed, station development, establishing industrial parks as well as invest in mega infrastructure projects.
The improvement of tracks could push the average train speeds from 160 km/hr to 180 km/hr, Indian officials say.
China is also asking India to hand over certain railway corridors for it to build, develop and maintain high speed railway lines.
While Japan bagged the Mumbai-Ahmedabad first bullet train project, Chinese officials have evinced interest in Chennai and Bangalore and Bangalore-Mumbai corridors to build high-speed trains. India has already invited China to modernise railway stations.
During Xi's visit, China is set to announce two industrial parks, one each in Gujarat and Maharastra to begin a host of manufacturing and energy units. The investments are aimed at addressing India's concern of mounting trade deficit which averaged $35 billion in the total $66.4 billion trade last year.
Xi's visit will focus on economic and trade development, Hu Shisheng, a research fellow at the state-run China Institutes of Contemporary International Relations, said.
Hu said Beijing looks to invest in mega infrastructure projects just like the way Japan did in the last two decades in China developing its infrastructure despite political rivalry.
'We can invest far bigger amounts than Japan and finish projects in India far cheaper and faster as we have a proven record in this record in this regard,' he said adding that China could be committing far higher than Japan's $35 billion.
Hu said Chinese leadership is not ruffled by Modi's Japan visit and his close rapport with Japanese Prime Minister Shinzo Abe as they knew Modi well before he came to power and interacted with him closely when he was the Gujarat Chief Minister. He said China would be guided by Modi's assurance to attach top priority to Sino-India relations.
Hu said if Japan steps up investments in India, it could lead to trilateral approach to increase focus on development despite the rivalry.
He said the border issue will not stand in the way of bilateral cooperation to be enhanced during Xi's visit.
After 17 rounds of talks, India and China have moved forward to resolve the vexed issue, he said.
What is left for experts and special representatives of borders talks is to find ways to demarcate the Line of Actual Control (LAC) and exchange maps which could happen under Modi and Xi's leadership as both are regarded as strong leaders, Hu said.
India asserts that the border dispute covered about 4,000 km, while China claims that it confined to about 2,000 km to the area of Arunachal Pradesh, which it refers as Southern Tibet.
'For the first time the two countries have strong leaders. It is the right time to reach a solution,' Hu said.
For the time, during Xi's visit, China is seriously considering to open a new route for Indian pilgrims to take part in Kailash and Mansarovar yatra which will be good for ties, he added.