AHMEDABAD, India, Sept 16, 2014 (AFP) - India's new prime minister will spend his 64th birthday Wednesday at a private dinner with Xi Jinping in his home state of Gujarat, as the Chinese president begins a visit that will set the tone for relations between Asia's rival superpowers.
Despite his hardline nationalist reputation, Narendra Modi moved quickly to engage with traditional rival China after taking office in May, and has pulled out all the stops for Xi's first state visit to India.
The Chinese president will fly into Gujarat's main city Ahmedabad, where giant billboards in Mandarin, Gujarati and English have been put up to welcome him.
But Modi has also made clear he sees China as a competitor and intends to pursue a more muscular foreign policy than the previous centre-left Congress party government.
The nuclear-armed neighbours fought a brief but bloody war in 1962 over the Indian state of Arunachal Pradesh in the eastern Himalayas, and are still embroiled in a bitter dispute over the territory.
India's new government recently eased restrictions on construction in the areas up to 100 kilometres of its disputed border, allowing the Indian military to build roads and other infrastructure in an area that China claims as its own.
But both sides say they want to focus on economic cooperation, with India seeking Chinese funding for a planned overhaul of its dilapidated railways and cooperation in nuclear energy.
China is India's biggest trading partner, with annual two-way commerce of more than $65 billion. But Indian data shows the trade deficit with China has soared to more than $40 billion from just $1 billion in 2001-02.
Modi, who ran for election promising to revive India's flagging economy, called for more Chinese investment when he met Xi in Brazil in July.
China meanwhile is eager to cement its relationship with its western neighbour at a time of heightened tensions with Japan and several Southeast Asian nations over disputed territory.
Rajrishi Singhal, senior fellow at New Delhi think tank Gateway House, said Xi would be eager to allay India's fears over the widening trade deficit during his visit.
"The tenor and purpose of President Xi Jinping's visit to India... can be gauged from the large size of the delegation accompanying him, comprising of senior ministers, leading business barons and bankers," said Singhal.
"Apart from the scheduled talks on political, security and border issues, the Chinese president's visit is likely to primarily focus on allaying the Indian government's growing discomfort over the widening trade deficit between the two countries."
China to invest in India
Modi has spoken of his admiration for China's economic growth in the last decade.
But he also enjoys a close relationship with Japan's President Shinzo Abe, and analysts have said he may be able to leverage Beijing's rivalry with Tokyo to secure Chinese investment.
China's consul-general in Mumbai Liu Youfa told the Times of India daily ahead of the visit that Xi would "commit investments of over $100 billion", pointing out that this was three times the amount pledged by Japan during a visit by Modi earlier this month.
Xi heads to India after visiting the Maldives and Sri Lanka as China increasingly asserts its influence in a region that has traditionally come under India's sphere of influence.
Colombo has sought to allay Indian fears by insisting its relations with Beijing are based on commercial rather than security considerations.
But some in New Delhi still fear China's growing engagement in the region is a deliberate strategy to encircle India.
The presence of the Dalai Lama, Tibet's exiled spiritual leader, is another source of tension between India and China, and New Delhi is on alert for any protests during Xi's visit.
Xi will visit Gandhi's former hermitage, now a museum, and have dinner with Modi in a tent on the riverbank in Ahmedabad, where he is expected to announce plans to build a Chinese-funded industrial park.
On Thursday he will hold formal talks with Modi and India's President Pranab Mukherjee in New Delhi and sign a series of agreements with the prime minister, before departing for China on Friday.
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