Government and State-run enterprises will continue to engage with India

When Gujarat Chief Minister Narendra Modi addressed a crowd of 200 Chinese investors at a Beijing five-star hotel in the autumn of 2011, he told them his State offered them “governance, transparency and stability”.

His message: these were three commodities that China Inc. would find difficult to locate elsewhere in India. Mr. Modi's pitch for the “Gujarat model” found many takers during his visit to Beijing — his fourth to China, reflecting the BJP prime ministerial-candidate’s now well-known admiration for the “China model”.

For Chinese enterprises, 2014 is a year when they will move forward cautiously in investing in India, according to several company representatives, officials and analysts. The official line here is that the outcome of elections will not matter to either the Chinese government or its state-run enterprises: they will continue to engage with India irrespective of the outcome. Even President Xi Jinping has expressed his desire to visit India later this year to engage with the new government, as The Hindu first reported last month.

Privately, however, industry representatives acknowledge they have been left frustrated by what they say is a lack of consistency in investment policy towards foreign firms in recent years. Chinese companies — especially those in the power and telecom sectors, where China has made its presence felt — have often complained of an unpredictable investment environment in India. According to officials, a particular challenge has been navigating often-conflicting signals and policies at the Centre and State levels — a problem alien to those operating in China’s one-party political system.

In recent years, the Chinese government has increasingly reached out to State governments, such as Mr. Modi’s in Gujarat, to build ties independent of those it has with New Delhi.

Between 2009 and 2012, three BJP Chief Ministers — including Madhya Pradesh’s Shivraj Singh Chouhan and Karnataka’s B.S. Yeddyurappa — visited China at the invitation of the Communist Party of China (CPC), albeit with the blessing of the Ministry of External Affairs.

On the other hand, no Congress Chief Minister visited the country during this period. The only other major visit by a State-level leader in this time was by Nitish Kumar from Bihar.

Last year, the political balance was somewhat corrected: Siddaramaiah from Karnataka and Ibobi Singh from Manipur became the first Congress CMs to visit China in more than five years, the former for a World Economic Forum meeting in Dalian. Both visits were, however, comparatively low-key: neither received attention from the Chinese State media, unlike Mr. Modi’s meeting with then Politburo member Wang Gang at the Great Hall of the People which was reported by several outlets.

At an investment event during Mr. Modi’s Beijing visit, Leng Yong, vice-president of the energy company TBEA which signed an agreement for a Rs.2,500-crore green energy park in Gujarat, said Mr. Modi’s government had provided “help on every problem”. “It can be difficult to understand Indian culture, and there may be some disputes and frictions. But after exchanging ideas, problems can be solved,” he said.

Others spoke of the State’s superior roads and power supply, addressing two of the more common anxieties of Chinese investors eyeing India.

Lan Jianxue, a South Asia scholar at the China Institute of International Studies (CIIS), said China was “already quite acquainted with Mr. Modi”, and any outcome in the elections would not “have a huge impact” as the relationship was “interest-oriented, not party-oriented”.

Mr. Lan and other analysts do not attribute much importance to Mr. Modi’s recent rhetoric on the campaign trail promising the hard line on China. After all, his message in Beijing was starkly different. He told Chinese investors then, “the two great countries will make Asia centre stage of the global economy.”

“I have always found abundant love and affection among the people of China,” he had said. “I have been saying for more than a decade that the 21st century belongs to Asia, and I have said this well before the economic analysts and financial experts highlighted the emergence of BRICS countries.”