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TERMS OF TRADE

As chief minister of Gujarat, Narendra Modi visited China four times. No other leader of a state government in India made as many visits to that country. Chinese enterprises reciprocated his gesture by making considerable investment in Gujarat over the past few years. But, as he embarks on his China policy as India’s new prime minister, Mr Modi may have to consider a whole range of issues between the two countries that have remained unresolved for decades. India’s responses to the first visit by a Chinese leader — Wang Yi, the foreign minister — after Mr Modi assumed office suggest that trade and economic issues will dominate New Delhi’s new China policy. It is not as if this is a completely new agenda. The volume of the India-China trade increased substantially during Manmohan Singh’s term as prime minister. But New Delhi has been upset with the trade imbalance that is considerably in Beijing’s favour. Given his record in economic matters, Mr Modi would like to initiate measures in order to close the trade gap as soon as possible. His government’s emphasis on building and modernizing infrastructure could be of special significance for a new regime in India-China economic co-operation. Mr Modi has openly praised China’s record in the development of infrastructure. India could benefit by opening up the infrastructure sector to more Chinese investment.

However, other bilateral issues require that Mr Modi also handle Beijing with caution. China’s approaches to some territorial issues in recent years, especially with regard to Arunachal Pradesh and Jammu and Kashmir, were clearly unacceptable to New Delhi. Its aggressive ways over territorial disputes with Japan, Vietnam and the Philippines in the East and the South China Sea are ominous signs for all of China’s neighbours. Facing international criticism of its actions in these disputes, China would be anxious to win India’s trust. But New Delhi cannot afford to ignore China’s recent record in the neighbourhood. A message may have been conveyed to Beijing when the political leader of the Tibetan government-in-exile was invited to Mr Modi’s swearing-in as prime minister. The Bharatiya Janata Party has a history of following a strident anti-China line on Tibetan issues. But Mr Modi’s initiatives on China must be driven, not by his party’s politics, but by India’s national interest.