Diverse Possibilities for Indo-Chinese Co-operation

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Indian and Chinese soldiers jointly celebrate the New Year 2019 at Bumla along the Indo-China border, Arunachal Pradesh, Tuesday, Jan 1, 2019

by Gaurav Tyagi 10 October 2019

The Second informal summit between Indian Prime Minister, Narendra Modi and Chinese President Xi Jinping will be held at Mahabalipuram in the Southern Indian province of TamilNadu on October 11-12.

The first informal summit between these two leaders took place last year on 27th April 2018 at Wuhan, capital of Central China’s Hubei Province.

During this meet, Chinese President Xi Jinping called for continuous strengthening of friendly relations between the two countries so, that their friendship continues to flow forward like Yangtze and Ganges rivers.

As per the Indian External Affairs Minister, S Jaishanker; India want its relations with China becoming ‘better and substantive’. India has refused to ‘toe the line’ of Trump administration, which describes 5G as a national security issue. Jaishanker told the Heritage Foundation think-tank in Washington on 3rd October that for India 5G is a telecom issue and not a political one.

China celebrated 70 years of its founding under the Communist Party on 1st October. Chinese Communist Party has now outlasted it’s erstwhile compatriot, the Communist party of U.S.S.R., which held power for 69 years.

During the late 1930’s, China had three main power centres. Nationalist China, controlled the government. Then there was the Communist Party and areas under the Japanese occupation.

Japan surrendered as a result of the axis powers losing the Second World War in 1945. The Communist and the Nationalist forces fought for control of the country. Communist leader Mao Zedong officially declared the establishment of The People’s Republic of China on October 1st, 1949.

China has progressed a lot since that time especially, since 1978 when the country’s ‘reform and opening up policy’ was launched under the leadership of Deng Xiaoping. It enabled the nation’s transformation from an underdeveloped centrally planned economy into an economic powerhouse.

Prior to 1978, the private sector was practically absent in China. Today, however private firms contribute approximately 70 % to the country’s GDP. These reforms have resulted in around 740 million people move from poverty to middle class income group. China is currently the second largest economy in the world, only behind the U.S.

The author has widely travelled across China. It’s really very impressive to see the plethora of world class highways connecting the length and breadth of the nation. Power and water are available to domestic households 24*7.

Chinese companies are engaged in businesses with almost every nation on this planet.

Indian economy has also come up a long way, especially after the economic liberalization policies initiated under the leadership of Late Prime Minister P.V. Narasimha Rao during 1991.

These reforms opened up India for foreign investment, reformed capital markets, deregulated domestic businesses thereby vastly changing the trade landscape of India.

Indo-China bilateral trade touched a historic high of $95.54 Billion in 2018 however, as per the data released by the Chinese customs the trade between these two countries declined by 3.59% during the first five months of 2019.

During this period, India’s exports to China came down by 1.62% to a figure of $7.70 Billion whereas, the Chinese exports to India came down by 4.10% to $29.17 Billion.

As per an article by Ajay Srivastava dated  29th April, 2018 in ‘The Economic Times’, it’s a myth that China’s share in India’s imports is exceedingly high.

China has an approximate share of 16.2%  in the Indian imports. The corresponding figure for Japan is 25.8%. South Korean and the U.S. import share in the Indian market is 21.4% each.

Indian Prime Minister Modi during his recent trip to the U.S, while speaking at the Bloomberg Global Business Forum in New York, invited global bussinesses to come and invest in India. He cited the historic reduction in Corporate tax rates by his government.

Chinese companies have an advantage over their  counterparts simply, due to the geographical proximity between China and India.

China has developed it’s infrastructure at par with any Western nation. The Chinese companies have decades of experience in sectors like, highway building and high speed railways. India needs rapid build- up/expansion in both these segments.

There is however, a growing concern in India about the large trade deficit between both these countries. Figures reveal that India’s trade deficit with Hongkong and China expanded to $60.1 Billion in 2018.

The author in one of his article for state owned Chinese newspaper, ‘Global Times’ way back in 2017 mentioned about the vast scope of movie business between China and India.

Indian films like ‘Dangal’, ‘Hindi Medium’, ‘Hichki’, ‘Secret Superstar’ etc. proved to be major blockbusters in the Chinese market.

As per the Chinese policy, only a few select foreign movies are allowed to be screened every year in the Chinese movie theatres.

China as a goodwill gesture should exempt Indian films from this regulation. Indian movie producers/distributors spend their own money in promoting and running their movies in the Chinese theatres therefore, China is not going to suffer any monetary losses.

A positive fallout of the aforesaid, will be that an increasing large number of Chinese citizens would get curious about India.

China is currently the largest source for outbound tourism in the world unfortuantely, India does not feature anywhere in the list of top ten foreign destinations frequently visited by the Chinese tourists.

India has ample tourism resources; beaches, mountains, adventure sports, historical architecture etc. Chinese companies can penetrate this lucrative market through co-operation with their Indian counterparts by offering package tours to India for the Chinese travellers.

India can also utilize Chinese expertise in the Electronic Vehicle (EV) plus Solar Cell segments. The world is rapidly moving towards non-conventional power sources, in order to counter the ever-increasing global pollution.

There is a huge potential for Chinese companies in the Indian market through setting up manufacturing, assembling or joint-venture plants in India either independently or through tie-up with interested local partners.

China also should consider opening up its huge domestic market for agricultural, meat, poultry and livestock imports from India.

According to a report in the state run, ‘Global Times’ dated 29th August, 2019, China has revised its drug laws to reduce penalties for the sale and import of Generic drugs from India.

This implies that China might open up its market for Indian Generic Drugs. India is a global leader in the world Generic Medicine market. These medicines ‘Made in India’ are as effective as the brand name drugs made in the West yet, they are priced much lower than the Western medicines.

Chinese government by granting access to the Indian Generic Medicines will not only largely help in addressing India’s complaint of widening trade deficit with China but also will greatly assist the ‘not so rich’ segment of the Chinese population to legally gain access to cost effective Generic Medicines for life threatening disease like Cancer.

It would be in the interest of both India and China, if Modi and Xi Jinping address the aforementioned issues during their forthcoming summit, thereby enabling these two big nations to take their relationship to the next level through these mutually beneficial measures.