China on Thursday pledged to invest $20 billion in India over the next five years and remove barriers for Indian exporters of value-added items like pharmaceuticals and processed food to Chinese markets.

On the second day of Chinese President Xi Jinping?s visit to India, the two countries, together home to over a third of the world?s population, also agreed to a five-year plan to boost their trade relations, now tilted heavily in favour of China.

China?s investment plan comes close on the heels of Japan?s Prime Minister Shinzo Abe, during Prime Minister Narendra Modi?s recent visit to that country, pledging to spend $35 billion in India over five years.

Although the investments promised by Xi turned out to be far lower than figures conjectured earlier, analysts said if the Indian economy restructures itself and enhances its absorptive capacity for foreign capital, Beijing won?t hesitate to step up its investments in the country. As China?s export-led growth model (reliant on domestic investments) is facing a constraint, it will push capital outflows in an unprecedented way, they said, adding that India, in dire need of capital to bridge its huge infrastructure deficit and strengthen its manufacturing sector, is a perfect fit in the Chinese strategy.

Stronger links between Indian IT companies and Chinese enterprises and a big increase in services trade (tourism, films, healthcare) are expected to be the outcomes of some other agreements signed between the two sides on Thursday. The Export Import Bank of China signed an agreement with the State Bank of India to extend a $1.8-billion line of credit for projects including those importing Chinese products. A similar agreement was signed with ICICI Bank for $1 billion.

Both countries also decided to work together to steer regional cooperation and advance their efforts

to build the BCIM (Bangladesh, China, India and Myanmar) economic corridor. In all, 12 agreements were inked between both the countries on Thursday, including cooperation in railways, outer space and customs.

Thursday?s deals comes on top of a slew of agreements signed between the two countries (and their companies) on Wednesday in Ahmedabad and here. Wednesday?s deals included those for China to set up two industrial parks in India ? one for manufacturing power equipment in Gujarat and another for automotive parts in Maharashtra. Separately, corporates in the two countries had signed deals worth $3.43 billion including a $2.6-billion deal between IndiGo and Industrial and Commercial Bank of China for the financing of more than 30 new aircraft. Reliance Communications signed a $162-million agreement with Chinese telecom equipment maker ZTE and another one ? worth $157 million ? with Huawei Technologies. Huawei on Thursday also agreed to partner Infosys in cloud-based projects.

China?s promised investments are expected to come in handy for India in expanding its railway infrastructure and building more roads and ports. Joe Thomas Karackattu, assistant professor at the China Studies Centre at IIT Madras, said: ?The investments promised marks a good start… In the past decade, Chinese investments in India, very low by the size of its economy, focused on metallurgical industries. That has to change towards disaggregated production (electronic goods, equipment, automobiles, textiles, etc), aimed at job-creation in India. On the Indian side, we have to be more realistic when it comes to viewing Chinese investments as a security threat.?

Srikanth Kondapalli, professor in Chinese studies at Jawaharlal Nehru University, said, ?The hype and expectations did not match with the reality as India, owing to its strategic interests, may not have yielded to the Chinese call to build a ?21st Century maritime Silk Road? (to revive a trade route from China through Southeast Asia and the Indian Ocean to Europe).?

It was not all bonhomie, either, with some realpolitik also featuring. ?I conveyed concern over the incidents along the border. The boundary question has to be resolved by earliest and have said that clarity is needed on Line of Actual Control (LAC),? Modi told media persons after a bilateral meeting with Xi. ?I have expressed concern over China?s visa policy as well as the water issue. Their resolution will strengthen the ties further,? Modi added.

Xi said he is committed to working with India to maintain ?peace and tranquillity? on the border. ?China-India border issue is a problem which has troubled both sides for long… As the area is yet to be demarcated, there may be some incidents,? he said.

Xi said that he had invited invited Modi to pay a visit to China early next year as 2015 is to be observed as ?Visit India? year in China. ?China and India have to act as twin engines to promote growth and prosperity in the region. We have decided to respect each other?s concerns. China has determination to resolve the boundary issue,? Xi said.