October 29, 2010 3:36pm | Share
By Barney Jopson and Alexandra Stevenson
This week began with India being pushed by the US to take a “more active” role in political and security cooperation in Asia, at a time when the region is becoming increasingly anxious about a more assertive China.
Indian leaders themselves have expressed fears their country is being hemmed in by Beijing’s expanding ties with Pakistan, Burma, Nepal and Sri Lanka. But recent days have provided a reminder that trade and business ties between the two regional heavyweights are proliferating too.
On Thursday, India’s Reliance Power ordered a massive $10bn worth of power generation equipment from Shanghai Electric Group in a deal financed by Chinese banks - a move that Anil Ambani, the Indian billionaire and chairman of Reliance ADA, described as “the largest order in the history of the power sector”.
The previous day, the governments of Hong Kong and China’s Guangdong province held a joint conference in New Delhi, the biggest of its kind, where they tried to entice more Indian businesses to join those already operating in China, including 1,500 that have bases in Hong Kong.
As the week wore on, political leaders from China and India offered calming - and uncannily similar - words on the two countries’ coexistence as they attended a meeting of the Association of Southeast Asian Nations in Vietnam, where they eventually met on the sidelines.
India’s prime minister Manmohan Singh first said that “the world has enough space” for both China and India to compete economically. Then on Friday, the Chinese premier Wen Jiabao said: “There is enough space in the world for India and China to achieve common development … to have cooperation.”
But don’t take that to mean all is well. India is clearly taking a more strident approach in its engagement with China. The countries’ disputed 3,500km border is still a persistent source of tension. And that’s one reason why India is bolstering its military capabilities by turning increasingly to US defence products - including a possible $11bn deal to buy 126 fighter jets to rearm its out-of-date air force.
Against the background of that uneasy relationship, the FT reported earlier this year that a group of Chinese mobile handset makers were considering setting up manufacturing facilities in India in an effort to gain political capital in their most important export market.
In public, business people like to pretend they operate in a realm free of geopolitics (not least because it helps them dodge tricky questions). But in China and India they will have to adapt to the reality of tensions between Asia’s two powers - and hope that in a small way they can reduce them by expanding business ties.
http://blogs.ft.com/beyond-brics/2010/10/29/sino-indian-detente/
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