India-China tensions threaten to leave Modi empty-handed at G-20

• Negotiations on statement stumble over debt and Russian war
• Still unclear whether Xi will attend meeting in New Delhi

Tensions between China and India threaten to prevent Group of 20 leaders from issuing a joint communique for the first time since the forum was created in 1999, according to people familiar with the situation.

In the run-up to the summit in New Delhi starting later next week, China has blocked draft proposals on language regarding emerging-market debt and condemning Russia's war on Ukraine, said the people, who asked not to be identified discussing confidential negotiations.

One of the people said China has been particularly belligerent in opposing Indian Prime Minister Narendra Modi's theme for the conference being written in Sanskrit, an ancient language associated with Hinduism.

India and China remain at loggerheads over flashpoints including a border dispute in the Himalayas, while India is a prime beneficiary of efforts by western companies including Apple Inc. to diversify its Chinese operations.

It even remains unclear if President Xi Jinping will attend the Sept. 9-10 summit in person, the people said, a move that would amount to a snub after the Chinese leader traveled to South Africa last week for the BRICS summit. Xi and Modi met on the sidelines of that event, holding a brief conversation to try and resolve their border dispute, only for it flare up again this week.

In addition to strains between China and India, the people said, differences are also emerging between the US-aligned Group of Seven nations and the wider G-20 over a new commitment of funding for developing countries to meet United Nations-backed targets on everything from hunger and education to clean energy and climate change.

Financing fudge
A draft version of a G-20 communique circulated before the summit called for an extra $500 billion of financing for countries to achieve the Sustainable Development Goals, according to people familiar with its contents. However, G-7 nations were unlikely to agree to that demand, the people said, potentially fueling a narrative of a deeper split between some of the world's wealthiest countries and emerging markets.

India's Ministry of External Affairs didn't respond to a request for comment on the summit preparations.

Modi faces perhaps his biggest diplomatic test yet in seeking to smooth over the divisions on a range of issues. Whereas host Indonesia managed an 11th-hour compromise last year on the language over Russia's war, India will likely face a trickier time due to the heightened tensions with China and Modi's push to move closer into the orbit of the US and its allies.

The US has made concerted efforts to woo India, with President Joe Biden hosting Modi at the White House in June, when Secretary of State Antony Blinken hailed the potential of US-Indian cooperation as "boundless."

In addition to military tensions along their border, China and India are both vying to be the leader of the so-called Global South, which has emerged as a key swing vote as divisions grow starker over global rules espoused by the US and its allies on one hand, and the world view of China and Russia on the other.

Disagreements are typically rife ahead of G-20 summits, and there's still time for a compromise on a concluding statement. The agreement last year in Bali, Indonesia, came together even after other ministerial meetings in the summit's lead-up failed.

— With assistance by Courtney McBride

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.