Indian Prime Minister Narendra Modi visited Beijing today, and said that it was time for them to rethink policies that thus far had stifled true cooperation between the two countries. The announcement came after the unveiling of some 24 diplomatic and economic agreements designed to promote communication between the two powers – but Modi also warned that the Chinese government should consider India’s grievances.

The main purpose of the visit was likely to deepen ties with the Chinese economy, while tiptoeing around the issues related to the disputed border between the two countries in the Himalayas (over which a brief war was fought in the 1960’s). These priorities appear to have been downplayed in favor of economic agreements, especially buying into the Silk Road Economic Belt strategy that China has been promoting throughout Eurasia although Indian public officials have disagreed strongly over whether they ought to lobby to participate, as Subrahmanyam Jaishankar, the Indian foreign secretary, said that India was never approached for cooperation on the issue.

Additional issues included the loosening of visa requirements and the decreasing number of border security posts, both relics of the bad relations of the 1960’s.

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News Briefs:

• Indian Prime Minister Narendra Modi, in addition to China and South Korea, also visited Mongolia, marking the first time any Indian PM has made the trip. The trip comes on the heels of an overall economic discussion with China, and Mongolia’s extremely attractive prospects as a supplier of raw materials and energy to energy importers like China and India is probably the reason. However, exports to China comprise some 90% of Mongolia’s GDP, and while their desire for additional customers is understandable, it might be impractical for India to step in as a viable alternative.

• Iranian warships fired shots at a Singapore-flagged cargo vessel in the Strait of Hormuz yesterday, marking the second time an Iranian vessel clashed with an unarmed commercial ship in the past month. The ship, the Alpine Eternity, has been involved in a financial dispute with Tehran, after it struck an Iranian oil platform on March 22, damaging it. The shots fired appeared to have been retribution for the damage.

• RFE/RL has a great piece speculating on if the IMF botched its outlook for Uzbek economic growth. Earlier in the week, the IMF released a statement saying that “strong public investment and strategic reorientation of gas exports from Russia to China have shielded the economy,” after Beijing offered a deal to Tashkent to ship its gas to China instead of Russia. Russia responded however, by cutting back on the gas purchased from Uzbekistan. Additionally, it is completely unclear how much gas is actually being exported to China.

• The Russian Central Bank has made its first foreign currency purchase in almost a year, purchasing $181 million dollars and selling off its roubles. The CBR announced it is planning to buy $100 million to $200 million daily to build its reserves back up for the next few weeks. They announced the purchases would be made smoothly during the trading day to minimize the impact on the exchange rate, and the CBR defended the decision despite criticism that it contradicts earlier policy of allowing the ruble to trade freely.

• China’s currency, the yuan, is set to become a new reserve currency by the IMF. The People’s Bank of china have called for the yuan to be included in the reserve basket, which so far consists of only the dollar, euro, pound, and yen and the IMF will be making its final decision later this year. An inclusion would spur the purchase of as much as 6.2 trillion yuan of onshore bonds by the end of the decade, and the fact that approval is internationalized will make it a far more attractive asset for sovereign fixed income trading.

• Turkmenistan’s government has pledged to create LNG gas infrastructure for transport to Europe after the conclusion of President Gurbanguly Berdimuhamedow’s diplomatic visits to Austria, and Slovenia. Citing a four-way meeting between the heads of state of Turkmenistan, Azerbaijan, Turkey, and the EU in Ashgabat recently, Berdimuhamedow said that the new Turkmen priority was to send its natural gas to Europe and envisioned a multi-state transnational gas pipeline infrastructure. No discussions specifically cited TANAP as a possibility.