Modi's China trip marks his 'Act East' policy

The three-day visit of Indian Prime Minister Narendra Modi to China was the first as head of government. But having visited China four times as chief minister of the Indian province of Gujarat, he knows the country well and hopes to duplicate its successful economic achievements. The Indian Prime Minister has an "Act East" approach to India's foreign policy and relations with China are a central part of that theme.

Modi's development agenda is similar to that of late Chinese leader Deng Xiaoping, and he is prepared to collaborate with China to improve bilateral economic ties. During his just concluded visit to China, business agreements worth $22 billion were signed between the two sides, with the focus being on infrastructure. These deals will create many jobs in India and help narrow the large trade gap between the two countries, which has grown from $36 billion last year to $48 billion (of a total trade of $71 billion) this year.

But India and China are also engaged in a hedging security strategy that involves the United States and Japan. Over the past few years, India has moved a bit closer to Japan and the US on security issues to bring about a multi-centered balance of power in Asia. And China's generous proposals on economic issues are one strategy to counter these moves. In fact, China and India have recently downplayed strategic differences such as the disputed border and each other's links with problematic neighboring states (for example, Japan for China, and Pakistan for India) to set a positive tone for strengthening bilateral ties.