Chinese Premier Wen Jiabao is visiting India after five years. While this is a stand-alone state visit, many have failed to notice that the Chinese Premier and President have met the Indian Prime Minister on ten occasions this year. This rather startling statistic points to the high frequency of interaction between the top strata of the Chinese and Indian political leadership. It also underlines the increasing number of common global and regional forums featuring both countries.
Premier Wen’s visit is expected to focus on both the gloomy and bright sides of the bilateral relationship.
The former features the irritants, primarily the border and Tibet. While Tibet may not feature prominently in the talks, borders are expected to be discussed and debated. The core component of the visit, however, will be trade and economic engagement.
Bilateral trade has touched $50 billion from a mere $3 billion a decade ago. Analysts have been at a loss to explain why trade has grown at such a fast pace, despite lingering disputes and a pronounced trust deficit. The only explanation seems to be the enthusiastic responses of market forces, from either side, to growing opportunities. It is worth speculating that if trade has risen to the level it has despite irritants, to what level can it rise under more enabling circumstances?
That trade and economic engagement will be at the forefront of Premier Wen’s visit is obvious from the composition of his delegation. More than 400 leading Chinese businesses are accompanying the Premier as part of the largest Chinese business team to ever visit India. The varied composition of the delegation reflects an across-the-board interest of Chinese businesses in the Indian economy. While assessing the potential of new exports in the Indian market will be a priority for some of the accompanying businesses, others will be keen on exploring the feasibility of setting up long-term commercial operations in India. This explains the presence of several real estate and construction firms in the delegation. Chinese electricity firms figure prominently in the delegation—as they are expected to—given the already firm imprints they have etched in India’s power sector. One of the high points of Premier Wen’s visit is the expected formalisation of an agreement between the Shanghai Electric Group and Reliance Power, involving the sale of thirty-six 660MW thermal generators. Interestingly, the delegation also includes representatives from the banking industry, which might signal the beginning of active Chinese interest in India’s financial sector.
India might feel elated by the fact that, from a Chinese perspective, it has begun receiving the same treatment that China has been extending to a select group of countries. This involves the separation of economic priorities from political differences and disputes. China has serious political differences with most of its major trading partners, such as the US, Japan, Taiwan and Korea. But such differences have not prevented China from growing robust trade and investment ties with these countries. Indeed, strong economic associations have probably helped in marginalising prickly issues on certain occasions. China has always been quick to spot economic returns and has never been held hostage by political baggage. It appears to be deploying the same approach towards India— putting a firm foot forward to harness India’s exciting economic potential, notwithstanding the persistence of historical disputes.
On its part, India will do well to take note of a few issues. No economic relationship can be approached with the primary objective of generating a trade surplus. Trade is a two-way, market-driven traffic. China’s trade imbalance with India is simply an outcome of the relative state of comparative advantages of the two countries, where Indian manufacturers find it more efficient to import capital goods and intermediates from China rather than purchasing them at home. Thus, India should look forward to Premier Wen’s visit not as an occasion for harping on correcting the imbalance but as an opportunity for developing meaningful synergies with an economy that is expected to become the world’s largest in a decade.
India will also do well to note that China views all its relationships through a pragmatic prism. Pragmatism encourages China to contemplate unexpected change. Less than four months ago, at Shenzhen, hardly anybody expected Premier Wen to talk of political reforms in the same breath as economic reforms. Similarly, not many expected him to lead the largest ever business delegation to India at a time when stapled visas are staple fodder in the Indo-China discourse. Both instances are examples of China’s pragmatic response to evolving realities—at home and in the neighbourhood. India may be better off emulating this posture and approaching Premier Wen’s visit in a business-like manner, both literally and metaphorically.
The author is a visiting senior research fellow at the Institute of South Asian Studies in the National University of Singapore (NUS). These are his personal views
source;the financial express
Premier Wen’s visit is expected to focus on both the gloomy and bright sides of the bilateral relationship.
The former features the irritants, primarily the border and Tibet. While Tibet may not feature prominently in the talks, borders are expected to be discussed and debated. The core component of the visit, however, will be trade and economic engagement.
Bilateral trade has touched $50 billion from a mere $3 billion a decade ago. Analysts have been at a loss to explain why trade has grown at such a fast pace, despite lingering disputes and a pronounced trust deficit. The only explanation seems to be the enthusiastic responses of market forces, from either side, to growing opportunities. It is worth speculating that if trade has risen to the level it has despite irritants, to what level can it rise under more enabling circumstances?
That trade and economic engagement will be at the forefront of Premier Wen’s visit is obvious from the composition of his delegation. More than 400 leading Chinese businesses are accompanying the Premier as part of the largest Chinese business team to ever visit India. The varied composition of the delegation reflects an across-the-board interest of Chinese businesses in the Indian economy. While assessing the potential of new exports in the Indian market will be a priority for some of the accompanying businesses, others will be keen on exploring the feasibility of setting up long-term commercial operations in India. This explains the presence of several real estate and construction firms in the delegation. Chinese electricity firms figure prominently in the delegation—as they are expected to—given the already firm imprints they have etched in India’s power sector. One of the high points of Premier Wen’s visit is the expected formalisation of an agreement between the Shanghai Electric Group and Reliance Power, involving the sale of thirty-six 660MW thermal generators. Interestingly, the delegation also includes representatives from the banking industry, which might signal the beginning of active Chinese interest in India’s financial sector.
India might feel elated by the fact that, from a Chinese perspective, it has begun receiving the same treatment that China has been extending to a select group of countries. This involves the separation of economic priorities from political differences and disputes. China has serious political differences with most of its major trading partners, such as the US, Japan, Taiwan and Korea. But such differences have not prevented China from growing robust trade and investment ties with these countries. Indeed, strong economic associations have probably helped in marginalising prickly issues on certain occasions. China has always been quick to spot economic returns and has never been held hostage by political baggage. It appears to be deploying the same approach towards India— putting a firm foot forward to harness India’s exciting economic potential, notwithstanding the persistence of historical disputes.
On its part, India will do well to take note of a few issues. No economic relationship can be approached with the primary objective of generating a trade surplus. Trade is a two-way, market-driven traffic. China’s trade imbalance with India is simply an outcome of the relative state of comparative advantages of the two countries, where Indian manufacturers find it more efficient to import capital goods and intermediates from China rather than purchasing them at home. Thus, India should look forward to Premier Wen’s visit not as an occasion for harping on correcting the imbalance but as an opportunity for developing meaningful synergies with an economy that is expected to become the world’s largest in a decade.
India will also do well to note that China views all its relationships through a pragmatic prism. Pragmatism encourages China to contemplate unexpected change. Less than four months ago, at Shenzhen, hardly anybody expected Premier Wen to talk of political reforms in the same breath as economic reforms. Similarly, not many expected him to lead the largest ever business delegation to India at a time when stapled visas are staple fodder in the Indo-China discourse. Both instances are examples of China’s pragmatic response to evolving realities—at home and in the neighbourhood. India may be better off emulating this posture and approaching Premier Wen’s visit in a business-like manner, both literally and metaphorically.
The author is a visiting senior research fellow at the Institute of South Asian Studies in the National University of Singapore (NUS). These are his personal views
source;the financial express
No comments:
Post a Comment