China and India Sign Landmark Infrastructure Investment Deal

As a result of a three day summit in which Chinese President Xi Jinping visited India, both countries signed landmark deals that will open up vast commercial and trade channels for two of the most populous nations in the world. These events will help accelerate India’s economy and industry, as well as strengthen China's regional relations.

China agreed to invest $20 billion in Indian infrastructure projects over five years and eight other trade related agreements. These agreements include two industrial parks in India that China will directly invest in. The parks will create a substantial amount of jobs in India and will modernize industry. A five year economic and trade development plan was also executed to increase trade between the two BRICS countries, and an agreement for the State Bank of India to extend a line of credit on one of its biggest lenders, The Export Import Bank of China, was signed as well. The investment in India’s infrastructure will also help modernize old and inefficient railways, which have been holding back economic growth.

Additionally, China agreed to reduce market entry barriers for Indian companies, which will allow them greater investment access to Chinese markets. This opens up more trading opportunities and will particularly help balance India’s trade deficit. The deals between the two countries led the way for Indian and Chinese companies to begin doing business together. Some companies even signed preliminary deals on the same day worth $3 billion for telecommunication and aerospace trades and leasing.

However, these deals come amidst border conflicts between the two countries. Both leaders have acknowledged that they need to come to an agreement to restore mutual confidence because the lack thereof has delayed such deals in the past. Do you think these new agreements will lead the way to increased business ties or will the border conflicts overshadow the two leaders’ efforts?