Now, Asian neighbours must kiss and make up
Oct 25 2013
Together China and India can take a lead in third-country markets
All this can happen even as the two struggle and try to sort out their decades-old border issues, end the incursions and share the waters of the Brahmaputra equitably.
The eight bilateral agreements signed during prime minister Manmohan Singh’s visit to China will serve as a positive catalyst to the two economies jointly playing a lead role in world affairs.
They have started on a good footing by opening each other’s markets to trade and investment. Removing the hurdles to investments and trade will accelerate the peace momentum after the two having consented to normalising the border situation and sharing river waters, besides from agreeing to set up a military hotline to avoid future incidents. These agreements mark a huge step forward since 2005.
Free dialogue at a one-to-one level between the two heads of the state also lays the foundation for moving on to playing a bigger role in the world, dominated so far by the US and Europe.
One cannot expect China to immediately give up its claim on Arunachal Pradesh. On its part, India will never allow China to have its way on Arunachal Pradesh, whether or not the two sides agree on a liberalised visa regime.
The new Chinese leadership under president Xi Jinping and premier Li Keqiang is mature enough not to make the disputes along the 3,225-km-long border between two countries, a hindrance to realising wider and deeper trade, business, development and strategic ties with India.
Beijing and New Delhi have travelled too far to be still haunted by the 1962 war. Incidentally, last year was the 50th anniversary of the war that had changed the way India looked at its northern neighbour. Liu Zongyi, a scholar at Shanghai Institute of International Studies, in a article published by Chinese Communist Party run Global Times admitted that the October 1962 China offensive was detrimental to both China and India.
He couldn’t have been more forthright about it. Relations between the two countries have never been the same again, regarding each other as adversaries, competitors and suspicious of each other’s moves.
There have been border troubles thereafter. But over the past 30 years, the borders have been relatively peaceful and the focus has moved on to trade, investment and economic ties.
Singh’s speech at the Chinese Communist Party’s Central School last week provides useful insights into the new impetus to ties that will evolve during the next decade.
Both China and India can leverage their respective strengths in manufacturing and services to their advantage and take a lead in third-country markets.
It’s no denying that India can derive a lot from Chinese companies’ infrastructure experience and expertise to provide the required necessary backbone for the proposed $1 trillion dollar investment in Indian infrastructure in the next five years. Chinese companies too will benefit from India’s edge in information technology and services and pharmaceuticals.
In June last year, when the then Chinese premier Wen Jiabao visited India, the two sides had decided to expand bilateral trade to $100 billion by 2015. Both sides were keen to address the over $30 billion trade imbalance that India has with China. These issues came to the fore again at Singh’s meeting with Wen Jiabao who is happily retired from active politics.
Both sides fully know that trade and investment cannot be a one-way street and give-and-take some is the key. Apart from trade, Chinese companies’ investments in India, especially in industrial parks and special economic zones, could take the economic ties to a new level.
If this finally happens, India will become another huge manufacturing giant along with China and help the two realise their long-term objective of contributing 60 per cent of the world’s annual income as was the case in 17th century.
It’s not that China is averse to such an opportunity. But it needs to aggressively court India with manufacturing investments. Similarly, allowing Indian companies and IT professionals free movement, apart from sourcing cost-effective quality formulations, bulk drugs and intermediates will benefit China that depends heavily on Europe for these.
Energy security could be another area of cooperation to free both from frequent oil shocks. The two will have to make independent and joint investments in oil assets globally to attain security in hydrocarbon economy.
The recent Sino-Russian agreement on crude supplies as well as refining outside the dollar trade can be the basis for this. An India-China-Russia axis on oil will have a significant impact, especially when all three are members of Brics.
A study by Research and Information Systems (RIS) for RBI in May concludes that the two countries have the wherewithal to drive the Association of South East Asian Nations (Asean) regional comprehensive economic partnership and thereby put the entire region on high growth trajectory in medium to long term. This will also clearly put both India and China on a high pedestal in world’s affairs.
The third major area could be jointly finding a sustainable model to feed their burgeoning population and remove poverty. The food security campaign of the Indian government offers the right window for such cooperation.
Together India and China are also home to the biggest number of undernourished, poor people. Joint development of models to give their rural economies a leg up and spread prosperity to villages should be an objective. China has done some interesting work in this area and may want to share the experience with India. China has been able to make several of its villages as production centres for goods on a mass scale where each home has become a small-scale unit. This has given many of its villages the economic independence that most Indian rural hamlets don’t have.
Prime minister Singh said on Thursday, “When India and China shake hands, the world listens.”
Actually, the two should be in a bear hug of friendship.