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Wed, Aug 22, 2007 - Page 10 News List

Abe's India visit meant to counter China: analysts


Japanese Prime Minister Shinzo Abe was scheduled to arrive in India yesterday -- the highest-level step yet in what analysts say is a long-term effort to balance, if not contain, China's growing economic and political might.

As Beijing's influence in Asia and around the world has grown, their common interests have forced Tokyo and New Delhi to begin warming their historically chilly relationship and to start forging closer economic ties.

"The key issue facing the whole region is how to accommodate the rise of China," said Suman Bery, director general of the National Council of Applied Economic Research in New Delhi.

Indian economists estimate that Japanese investment in India will reach US$5.5 billion by 2011, compared with just US$515 million last fiscal year.

Abe is on his first trip to India. He and his Indian counterpart, Manmohan Singh, are expected to unveil public-private partnerships and new business initiatives.

Leading the agenda will be a US$100 billion infrastructure project to create a high-tech manufacturing and freight corridor between New Delhi, India's capital, and Mumbai, its port and financial center. It would be the most expensive development project in India, and a third of the bill would be paid by Japanese public and private money. Abe and Singh are expected to announce that the two governments have reached formal agreement on the deal.

Japanese business leaders traveling with Abe will disclose similar deals this week -- on natural gas, transportation, currency swaps and Japanese investment in Indian educational projects, Indian officials said.

Chief executives from Toyota, Mitsubishi, Canon, Hitachi and others have joined a new India-Japan business leader forum, which will meet for the first time today in New Delhi.

Consultants are trying, so far in vain, to coin the catchphrase, like "the Samurai and the Swami," that will sum up the nascent strategic economic relationship between the countries.

Courting India has come slowly for the Japanese, who were highly critical of India's surprise nuclear weapons test in 1998.

Japan's trade with India was about US$6.5 billion last year, according to the Indian government -- about 4 percent of Japan's trade with China.

"Whatever doubts Japan had for so long, now India is smelling like roses," said Jagdish Bhagwati, an economist and a professor at Columbia University. "They want to get in before it is too late."

For Japan, India is an attractive market, both for its growing consumer spending and cheap labor. Tokyo also has an interest in diversifying its Asian trading partners. As an increasingly confident China has flexed its muscle regionally and globally, anti-Chinese sentiment has been rising in Japan, as has anti-Japanese sentiment in China.

"India is a much safer bet, in business terms," because it lacks the historical baggage, said Richard Tanter, professor of international relations at the Royal Melbourne Institute of Technology in Australia.

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