Xi, Modi Mamallapuram summit highlights: China agrees to set new mechanism to address India's concerns on trade deficit

Prime Minister Narendra Modi and Chinese President Xi Jinping on Saturday agreed to set up a new mechanism for matters relating to trade and investment and felt the two countries should cooperate on important regional and global issues. Prime Minister Modi had around five-and-half hours of one-on-one talks with Chinese President Xi Jinping spread over two days. It was followed by delegation-level talks. Here is the crux of what the two countries leaders discussed, and what they didn't, as detailed by Foreign Secretary Vijay Gokhale at a briefing on the outcome of the second informal summit between the two leaders in the coastal town of Mamallapuram in Tamil Nadu:

• Among one of the important developments was China's assurance that it will sincerely act upon the massive trade deficit between India and China. President Xi has said that China is ready to take concrete measures to reduce the trade deficit, which currently stands at a whopping $57 billion, which the other country justifies as the difference in their production capacities. China is India’s largest trading partner while India is China's 11th largest trading partner. In a decade to 2017-18, India’s exports to China rose by $2.5 billion. In the same period, China’s imports in India rose by $50 billion, and India has been raising the issue with Beijing for several years.
• The Chinese side has apparently proposed to set up a high-level mediation channel to take actionable steps on India's legitimate trade concern. This was one of the only concrete announcements made after the summit as it is unusual for world leaders to give out definitive announcements on any specific issue. They rather discuss the general direction of bilateral relations and leave out the modalities to be fleshed out by their respective diplomats. In this case, the trade communication channel will be headed by the Chinese Vice Premier and Indian Finance Minister Nirmala Sitharaman.
• Another considerably definitive statement, during Gokhale's briefing, was China's appreciation of Indian concerns regarding the Regional Comprehensive Economic Partnership (RCEP). President Xi has assured that India's concerns over RCEP will be duly discussed. Although both Modi and Xi emphasised on the importance of having a rules-based global trading system, the Indian prime minister clarified to China that a deal should be balanced and equitable. China said it has heard India's concerns and has agreed that there are issues regarding the ambitious regional free trade pact. Gokhale said both leaders felt that the two countries should cooperate on important regional and global issues.
• Kashmir was deliberately away from the otherwise freewheeling conversation between the two heads of States. Gokhale, in his presser, categorically denied several times that the Kashmir issue came up between the two leaders. This appears to be a conscious strategy on India's part to leave out thornier issues that have the potential of derailing talks on slightly less complicated predicaments between the two nations. Gokhale, however, did admit in passing that the Chinese premier spoke to Modi about Pakistan prime minister Imran Khan's visit to China just before Xi left for India. The Indian prime minister "heard him out", Gokhale merely remarked when pressed for details of the discussion about Khan's visit.
• Xi also talked about the need for enhancing defence cooperation, Gokhale said. Both Xi and Modi said the two countries need to look to the future. This was perhaps a reference to the various military drills the two countries. Defence cooperation between the two giants is largely limited to training, joint exercises and other professional interactions. Even though China is looking to position itself as a top arms dealer, joining the ranks of the US, Russia, Germany and France, India is unlikely to be a buyer because of obvious conflict of interest, originating from their own border dispute plus continued Chinese support to the Pakistani military.
• The two leaders agreed that both countries should work together to deal with the challenge of terrorism, Gokhale said. However, it is unreasonable to imagine this would mean even the slightest action against Pakistan, India's biggest concern when it comes to terrorism. Gokhale lightly referred to radicalisation and threats emanating from groups like Daesh or ISIS.
• And lastly, expect more of such informal summits as they help maintain stability in relations even in the face of a naturally competitive relationship between the two neighbours. Building on the 'Wuhan spirit', the prime minister spoke of the "Chennai connect" for a new era of cooperation between India and China, he said. Xi has also invited Modi for the next summit to China. The prime minister has accepted the invitation and a date would be chosen later, after mutual agreement.

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FP Staff