China pledges $25 billion of investments in India during Xi trip despite border standoff

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi look on during the signing of agreements in New Delhi on Sept 18, 2014. India's prime minister expressed concern to China's visiting President Xi Jinping September 18 about "inciden
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi look on during the signing of agreements in New Delhi on Sept 18, 2014. India's prime minister expressed concern to China's visiting President Xi Jinping September 18 about "incidents" on the two countries' disputed border, as a stand-off between troops at the frontier overshadowed key talks. -- PHOTO: AFP

NEW DELHI (REUTERS) - A standoff between Indian and Chinese soldiers overshadowed a visit to New Delhi by Chinese President Xi Jinping on Thursday, with a US$20 billion (S$25 billion) investment pledge nearly eclipsed by robust comments from India's new Prime Minister Narendra Modi about the dispute.

Modi and Xi emerged from a long meeting to address reporters soon after officials confirmed that soldiers had pulled back from their positions on a plateau in the western Himalayas that is claimed by both nations.

"I raised our serious concern over repeated incidents along the border," said a stern Modi, with Xi sitting to his right. "There should be peace in our relations and in the borders. If this happens, we can realise true potential of our relations," added Modi, a nationalist elected in May partly on promises to build a more assertive India.

Dozens of soldiers from both sides had faced off on the Ladakh plateau for over a week in a dispute about infrastructure works near the de facto border, where the two countries fought a brief war in 1962.

Raising hopes for a new push to resolve their territorial differences, Modi called for an early border settlement with China. The two sides have held 17 rounds of border talks since the early 1990s without making significant progress. Modi has yet to appoint a special envoy to restart the talks.

"We have to address the boundary question very soon," Modi said, urging "clarification" of the Line of Actual Control - the front line where fighting ended.

In his comments, Xi played down the tensions and agreed with Modi that they should work to settle the border question, using language China has used in the past. "Sometimes there might be certain incidents, but the two sides are fully capable of acting promptly to effectively manage the situation," he said.

China was committed to the path of peaceful development, he said later, addressing concerns in Asia about Beijing's increasingly assertive territorial claims including in the South China Sea, which is criss-crossed with maritime trade routes.

"A warlike state, however big it may be, will eventually perish," he said in a speech, adding that China believed its neighbours were key to its wellbeing.

Srikanth Kondapalli, a China watcher with Delhi's Jawarharlal Nehru University, said Modi's tough words were aimed a domestic audience ahead of regional elections, including in Ladakh, a remote corner of Indian-administered Kashmir. "As a nationalist, he stood his ground, but the fact of the matter is that he cannot control the other side," he said, saying fast progress on a permanent border fix was unlikely.

"Both sides have given a diplomatic but stiff response, both sides have said (the border) should be resolved early but there is no deadline."

Despite the tension, the two sides were able to agree on investments aimed at significantly upgrading their commercial relationship, with China pledging US$20 billion over the next five years for industrial parks and infrastructure including railway technology.

That contrasts with just US$400 million in Chinese investment in India over the last 14 years.

The leaders agreed to begin talks on cooperating in the nuclear power industry and Xi said China would support India becoming a full member of the Shanghai Cooperation Organisation - a regional security body whose largest members are China and Russia. He also supported India's aspiration to play a greater role at the United Nations, including on the Security Council.

Modi is keen on Chinese investment to help balance US$65 billion in annual trade that is heavily tilted in China's favour. Xi promised more access for India's pharmaceutical, farming and fuel products to China.

Xi arrived in India on Wednesday, visiting Modi's home state of Gujarat for a riverside dinner that also marked the prime minister's 64th birthday. Kondapalli, the academic, said the chemistry between the two men was good and set the stage for a more personalised relationship over the next few years.

"For the sake of stability, for the sake of economic relations ... this bodes well," he said.

Another irritant for China is the presence in India of exiled Tibetan spiritual leader the Dalai Lama, who has lived in the country since fleeing a failed uprising against Chinese rule of his homeland in 1959. A government of exiled Tibetans and tens of thousands of refugees are also based in northern India.

About 20 supporters of a free Tibet, mainly women, protested within a few metres of the building in New Delhi where Modi and Xi met, waving Tibetan flags and shouting: "We want justice." Police detained them after a few minutes.

Several other small pro-Tibet protests broke out across the city. Modi reiterated India's position that it will not allow "anti-China" activities from Tibetans in the country.

Speaking in India's financial centre, Mumbai, the Dalai Lama said Xi should use his visit to learn from the Indian experience of democratic rule, and learn democratic practices. He also linked the border flareups to Tibet, which stretches the length of the Chinese side of the border with India.