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Chinese Investment in Indian Railways May Get Shape during Xi Jinping’s Visit

China will pledge to invest billions of dollars in India’s rail network during a visit by President Xi Jinping this week, bringing more than diplomatic nicety to the neighbours’ first summit since Narendra Modi became prime minister in May.

The leaders of Asia’s three biggest economies – China, India and Japan – have crisscrossed the region this month, lobbying for strategic influence, building defence ties, and seeking new business opportunities.

Beijing’s bid to ramp up commercial ties in India comes despite a territorial dispute that has flared anew in recent years, raising concerns in New Delhi, where memories of a border war defeat in 1962 run deep.

It follows a pledge by Japan to invest $35 billion in India over the next five years – including the introduction of bullet trains – and a drive to deepen security ties during talks earlier this month between Modi and Prime Minister Shinzo Abe in Tokyo.

India and China are expected to sign a pact that will open the way for Chinese participation in new rail tracks, automated signalling for faster trains and modern stations that India’s British-built rail system desperately needs, having barely added 11,000 km of track in the 67 years since independence.

China, which added 14,000 km of track in the five years to 2011, is also pushing for a share of the lucrative high-speed train market in India, which it says would be cheaper than Japanese proposals.

“India has a strong, real desire to increase its cooperation with China and other countries to perfect and develop its rail system, and has concrete cooperation ideas,” Assistant Chinese Foreign Minister Liu Jianchao told reporters ahead of Xi’s trip.

“India is considering building high-speed railways, and China has a positive attitude towards this.”

Beijing is looking to invest another $50 billion in building India’s ports, roads and a project to link rivers, part of an infrastructure push that PM Modi has said is his top priority to crank up economic growth.

Chinese investment will also help narrow a trade deficit with India that hit $31 billion in 2013.

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