17 Jan, 2008

India, China Can “Both Compete and Cooperate”

Imtiaz Muqbil

“The rise of China and India should be viewed as an ‘international public good’ by the global community, since it offers new opportunities to sustain global growth,” says Indian Prime Minister Dr Manmohan Singh.

In this dispatch:

1. INDIA, CHINA CAN “BOTH COMPETE AND COOPERATE”

2. BUSINESS LEADERS TOLD: “THE BEST IS YET TO COME”

3. “SHARED VISION” PLAN IS AN IMPORTANT MILESTONE

4. STRONGER TIES CAN “INFLUENCE REGIONAL AND GLOBAL TRENDS”

5. INDIA TO PARTICIPATE IN SHANGHAI EXPO 2010

[Editor’s Note: India and China are next door neighbours, have massive populations and surging economies. Yet, they have only 22 bilateral flights a WEEK, roughly equal to the number of DAILY flights between Singapore-Bangkok. This is set to change rapidly as a result of Indian Prime Minister Dr Manmohan Singh’s visit to China between 13-15 January. In a move that will dramatically boost people-to-people contacts across a wide spectrum of leisure, business, MICE and niche-market travel, the two countries signed 11 agreements in the fields of Railways, Traditional Medicine, Agriculture, Rural Development, Land Resource Management, Geo Sciences and Cultural Cooperation.

Excerpts from speeches made at various forums by Dr Singh, as run in this dispatch, clearly indicate the evolving strategic framework. A critical part of what Dr Singh called the “centre of gravity of the world economy moving towards Asia”, closer bilateral ties will be built via a roadmap document, “The Shared Vision of the 21st Century.” This will have a positive ripple effect on the Chinese and Indian diasporas worldwide, help address economic and geopolitical instability and allow the two countries to find some common solutions to common problems such as environment, poverty alleviation and energy supplies.

Precisely because Dr Singh’s visit to China received scant coverage in the global media, Travel Impact Newswire is proud to feature yet another ground-breaking report of a kind that other research and media organisations can only talk about.]

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[Editor’s Note: In order to prevent any inaccuracy, all numbers in the following are being retained in their original Indian reporting format. One crore is 10,000,000, and one lakh is 100,000. Pls use www.xe.com for conversion]

1. INDIA, CHINA CAN “BOTH COMPETE AND COOPERATE”

January 13, 2008 — Shortly after his arrival in Beijing, Prime Minister Dr. Manmohan Singh met representatives of Indian business accompanying the Prime Minister on his visit to China. Led by the two business associates, CII and FICCI, the delegation of business leaders appraised the Prime Minister on recent trends in bilateral trade and investment flows. They drew attention both to the opportunities and to challenges faced by Indian business in China.

After listening to their statements and observations, the Prime Minister called for increased economic engagement between India and China. He urged Indian business leaders to study China and to identify opportunities for business and greater engagement. Dr. Singh observed that a large part of the thinking in India about China is shaped by western views of China, and that there is need for greater investment in India in a better understanding of the processes of change in China.

The Prime Minister said, “The rise of China and India should be viewed as an ‘international public good’ by the global community, since it offers new opportunities to sustain global growth. At a time when there are concerns about a global economic slowdown, China and India can sustain global growth through their own development.”

Dr. Singh added, “It is a historic necessity for the two great neighbours to work together. There will be areas of competition, and there will be areas for cooperation. There is enough space in the world for both countries to continue to grow and address the developmental aspirations of their peoples.”

Urging Indian business to “think big”, the Prime Minister said, “Indian business is ready to face the brave new world of globalization. China is an important part of that brave new world. We must engage China and learn to both compete and cooperate.”

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2. BUSINESS LEADERS TOLD: “THE BEST IS YET TO COME”

January 14, 2008 – Excerpts from Dr. Singh’s address to business leaders attending the India-China Economic, Trade and Investment Summit.

Businessmen throughout history have been promoters and protectors of human civilization. The India-China Economic Trade and Investment Summit is a unique gathering of businesspersons representing two most populous countries of the world. You have grown competitive by starting from continent-sized markets and graduating to world markets. Businessmen of India and China are the symbols of the growth stories of both our countries. Businessmen are the creators of wealth. I therefore, salute your dynamism and entrepreneurship. Much has been done, much has been achieved but I honestly believe the best is yet to come.

India and China are today the fastest growing large economies in the world. We should remember that China, India and Europe had almost equal shares of world income in the early 18th century. As the 21st century unfolds, both India and China stand poised to regain their weight in the evolving global economy.

Our two countries will need to work together to ensure that we contribute to, even as we benefit from, the economic resurgence and integration of Asia. Our two economies are becoming engines of economic growth and must use our natural and human resources, technology and capital for the common benefit of our region and indeed the world as a whole.

The Indian economy has witnessed growth rates of close to 9% per year in the last three years. Our macro-economic fundamentals are strong. We have undertaken a series of economic reform measures to facilitate investment and growth. Our savings and investment rates have increased to 35% of our GDP and are rising. With a predominantly young population, there is potential for further increase in these rates.

Although India is more integrated with the global economy than ever before, our growth has been largely fuelled by an expanding domestic market. All these factors give us confidence that we will be able to step up our annual growth rate to 10% within the next five years.

Our bilateral trade with China has doubled in the last two years. Our trade target of 20 billion US dollars by 2008 has been reached two years ahead of schedule. The revised target of 40 billion US dollars by 2010 is also likely to be achieved two years ahead of schedule. This makes me wonder whether our two Governments have been underestimating the capabilities of our respective industries and their strong urge to do business with each other. We therefore propose to set more ambitious targets.

DIVERSIFY THE EXPORT BASKET

In the area of trade, the challenge before us is to diversify our export basket to China. I would urge Indian business to vigorously pursue opportunities for expanding non-traditional items of export. Such efforts, when matched by greater market access for Indian goods in China, will help to bridge the rising trade deficit between us.

In addition to our competitive manufacturing industries, India has a diversified agricultural production base. Our food processing industry is also growing rapidly and we can supply quality agricultural and marine products to the Chinese market. A conducive environment should be created for this trade to expand.

The services sector accounts for more than 50% of India’s GDP and more than 40% of China’s GDP. India has had considerable success in positioning itself in hi-tech services in world markets. There are today enormous opportunities for both India and China to expand trade in services, particularly in construction and engineering, education, entertainment, financial services, IT and IT enabled services, transport, tourism, and health. We will work together with the Chinese government to remove administrative barriers and simplify regulatory regimes in order to move forward in all these areas.

Chinese companies have been actively engaged in the Indian market and I welcome that phenomenon. I understand that Chinese firms have contracted projects in India worth over 12 billion US dollars. Indian majors have set up a number of joint ventures or subsidiaries in China in the pharmaceuticals and software sectors, among others. This too I greatly welcome.

We must strengthen the base of our economic cooperation through business alliances and collaboration in technology transfer and development. We seek to promote bilateral investments in traditional sectors such as petrochemicals, steel, healthcare, IT and automobiles. Equally, our entrepreneurs should explore opportunities in new areas such as biotechnology, advanced materials, renewable energy and low carbon technologies.

THREE PRONGED STRATEGY

I would therefore suggest a three-pronged strategy for the chambers of industry and commerce of both countries to achieve these goals and objectives.

Firstly, you should jointly develop a strategic plan for the future so that both of us a vision of our economic cooperation and a road map for its implementation. This will ensure that a long-term strategic perspective that looks ahead to future challenges and opportunities guides our relationship and our ties.

Secondly, we should develop profitable business models that factor in our complementarities and competitive strengths and the special needs of large markets both in India and in China. The opportunities are many and innovation is the key word to exploiting them.

Lastly but equally importantly, you need to acquire insight into each other’s markets, business customs and managerial styles. In the final analysis, doing business is about developing understanding and trust in your partners. Additionally, the business communities of our two countries should develop a deeper understanding of the macro-economic outlook, the regulatory regimes and of factors that have a bearing on the competitiveness of enterprises in both our countries.

I am very glad to know that the number of visitors exchanged between our two countries approached the half million mark last year and direct flight connections have risen to 22 a week. This is encouraging but not good enough. We need to encourage this growing interaction, including through easier grant of visas.

I would like to assure this distinguished gathering that both governments will work together to put in place an enabling environment for greater trade, investment and economic interaction between our two great countries. This has to include creating a level playing field by addressing such issues as non-tariff barriers, IPR protection and market-related exchange rates.

All countries must compete in global markets and such competition is not inconsistent with co-operation nor is it adversarial. The industrialised countries constantly compete with each other and they see this competition as constructive and mutually beneficial.

PRINCIPAL DRIVER OF PARTNERSHIP

Economic cooperation between India and China has become a principal driver of our strategic and cooperative partnership for peace and prosperity. Several bilateral understandings and agreements are already in place to address different sectoral aspects which impact on our economic cooperation. India and China working together should develop a habit of mutually advantageous cooperation.

In 2003, our two Governments had established a Joint Study Group to examine the potential for economic engagement. Pursuant to this, a Joint Task Force has finalised its report on the feasibility of a India-China Regional Trading Arrangement. During my visit, I look forward to discussing further steps in this regard with the leadership of China.

In conclusion, I would like to congratulate the dedicated and hard-working people of China for the rapid economic progress that they have made in the last thirty years, when the reform, opening up process was launched. I would also like to thank the China Council for the Promotion of International Trade for organizing this unique event, and making this partnership of the business communities of our two countries possible to give greater content and depth befitting our strategic and cooperative partnership for peace and prosperity and development.”

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3. “SHARED VISION” PLAN IS AN IMPORTANT MILESTONE

January 14, 2008 — Dr. Singh’s statement to the press in Beijing:

India-China relations are of regional and global significance. The profound changes taking place in the world today present both our countries with a historic opportunity to work together towards a 21st century that is conducive to peace and development. The Shared Vision of the 21st Century that Premier Wen and I have just signed is an important milestone in the evolution of our relations. It reflects not only our common perceptions but also our desire to purposefully cooperate in the future.

We have agreed to continue deepening the mutual understanding and trust between our armed forces. We welcomed the successful conclusion of our first joint military training exercise, and agreed to have a second exercise in India this year.

We recognised that our strategic and cooperative partnership should be based on strong, diversified and mutually beneficial economic ties. We have decided to increase our bilateral trade target from 40 billion US dollars by the year 2010 to 60 billion US dollars.

We have mandated our Ministers of Commerce to examine the Feasibility Study on the Benefits of a Regional Trading Arrangement and make suitable recommendations at an early date.

We have decided to establish a high level Business Leaders Forum to advise us on the future of our economic ties.

We had useful discussions on the outstanding issue of the Boundary Question. We welcomed the progress made by our Special Representatives in seeking a framework for settlement of the boundary question that is fair, reasonable, mutually acceptable, and based on the Agreement on Guiding Principles and Political Parameters signed in April 2005.

While the Special Representatives continue their efforts, both sides reiterated their mutual commitment to maintaining peace and tranquility in the border areas.

I conveyed India’s appreciation for China’s assistance in providing flood season date for some of our trans-borders rivers. Premier Wen and I agreed that we will continue to expand our cooperation in this area through the Expert level Mechanism.

Science & Technology is another priority area and we have identified earthquake engineering, disaster management, climate change, biotechnology and nano sciences as areas for further cooperation. We have decided to intensify high-level exchanges between our two countries. I have invited Premier Wen to visit India at his earliest convenience.”

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4. STRONGER TIES CAN “INFLUENCE REGIONAL AND GLOBAL TRENDS”

January 15, 2008 — Dr. Singh’s address to the Chinese Academy of Social Sciences in Beijing:

Yours is a premier institution, which has been at China’s intellectual vanguard over the last three decades and has contributed immensely to China’s reform and development. We in India admire the remarkable economic progress that China has made. The rise of China is among the most important developments of our times. As China’s largest neighbour, and a friend, we cannot remain untouched by this momentous process.

The great Chinese scholar and one of the foremost Indologists of our times, Professor Ji Xianlin, has rightly said and I quote: The two great cultural circles – China and India – have always learned from and influenced each other, and this process greatly speeded the development of the two cultures, which is both history and reality, unquote.

Today, both India and China are in the midst of rapid transformation. The development agenda has taken centre-stage in both our countries. Our systems are different, but people in both countries are united in their aspiration for a better future. When countries of the size of China and India, together accounting for 2.5 billion people begin to unshackle their creative energies, it is bound to impact the whole world. The world knows it and is watching with great interest.

SPECIAL OPPORTUNITY

I therefore would like to use this opportunity to speak to you on India’s development experience and on what I see as a special opportunity for India and China to work together in the twenty-first century.

Premier Wen Jiabao recently spoke in Singapore about how it was only with openness and inclusiveness that a country can become strong and prosperous. In the past few decades, China has benefited enormously from opening its economy to the rest of the world, and so has India.

India is changing and I would like to acknowledge that the success of China has been a stimulus to change. This process began in the 1980s and was intensified in 1991. In our system change can only be brought about through public debate and it takes time to build a political consensus. However, I am happy to say that in the 16 years that have elapsed since 1991, successive governments in India have carried forward the reform process, with the result that today India is on a high growth path.

Our economic growth during the last five years has averaged about 8.5% per year. This is unprecedented, and has created confidence that we can do even better. We are aiming to raise our growth rate to 10% per year in the near future. There is a palpable sense of confidence in the country and there is optimism about the future.

The Indian economy has demonstrated resilience in meeting the challenges posed by globalization. In the last two decades, our industry — especially large and medium industry — has restructured to become globally competitive. This process is continuing.

CONDUCIVE ENVIRONMENT

We have, over the past few years, been able to create an environment conducive to creativity and enterprise. This is symbolised by the success of our information technology sector in world markets. There are other sectors that are also emerging. Pharmaceuticals and auto-components are both highly competitive. Indian multinationals have emerged that are investing abroad. I am very happy to say that many of these companies are also investing in the great country of China.

A few weeks ago, our National Development Council, which includes the Central Government together with our States and Union Territories, approved India’s Eleventh Five Year Plan covering the period 2007-2012. The Plan seeks to build further on the growth momentum already created to reach 10% growth by the year 2012. But it also recognises that growth alone cannot be the goal of a planning process.

We also need to ensure that growth is inclusive and equitable. We have to address the problems of inter-regional disparity and specifically, urban-rural disparity, revival of the agriculture sector, limited availability of land, and the lack of mobility of those employed in agriculture to productive jobs in industry. This is what we mean by inclusive growth. It is somewhat similar to what is called harmonious growth in China.

We have decided to make important structural shifts in the Plan to address the critical constraints that hold us back from achieving our objective of faster and more inclusive growth. As far as growth is concerned, the biggest priority must be the development of infrastructure, including infrastructure in rural areas. We propose to increase investment in infrastructure from 5% of GDP in 2006 to 9% by 2012 relying on both public and private investment.

Education, including skill development, is among our major priorities. We propose to triple the share of Central government spending on education and skill development from less than 8 per cent of total plan expenditure in the Tenth Plan to over 19 per cent in the Eleventh Plan. In fact, more than half of total government budgetary spending has been earmarked for agriculture, education, health and rural development, reflecting our emphasis on inclusive growth.

Sustainability of development for a country of India’s size is another key concern. We need to address critical challenges relating to energy, food and water security, and climate change. These are challenges that China faces as well.

CLOSELY LINKED POLICY PRIORITIES

India’s domestic and foreign policy priorities are closely linked. The primary task of our foreign policy is to create an external environment that is conducive for our rapid development. Our policy seeks to widen our development choices and give us strategic autonomy in the world. The independence of our foreign policy enables us to pursue mutually beneficial cooperation with all major countries of the world.

The establishment of peaceful and cooperative relationships in our neighbourhood is an intrinsic element of our foreign policy. We realise that our destinies are linked by geography and history. Both India and China seek tranquility and stability in our immediate neighbourhood and extended region.

We recognise that the world is evolving and developing features of multipolarity. It is natural that major powers, bound together by economic interdependence, will seek to cooperate with each other to mutual benefit. India and China must be part of this cooperative framework.

I look forward with optimism to the future and the role which India and China are destined to play in the transformation of Asia and the world as well. This optimism is based on my conviction that there is enough space for both India and China to grow and prosper while strengthening our cooperative engagement. History shows that our two civilizations, flourished for centuries, side by side, interacting and influencing each other.

OBLIGATION TO PUT BEHIND DISPUTES

The Strategic and Cooperative Partnership for Peace and Prosperity that we established in 2005 seeks purposeful engagement covering a wide range of areas. At the same time, we recognise the obligation we have to put behind us disputes and problems that have troubled our relations in the past.

The boundary between us is peaceful. We are both determined to keep it so while our Special Representatives seek a settlement of the boundary question. In April 2005, during the visit of Premier Wen Jiabao to India, we agreed on a set of Political Parameters and Guiding Principles for the settlement of the boundary question. We are confident that those Principles will guide us to a mutually satisfactory solution of this issue. We have also agreed to set up a mechanism to look at trans-boundary rivers, and will make a success of its work.

We are satisfied with the results of our efforts so far and are convinced that the potential for India-China relations is great and will be realised.

Where do we go from here and what is our vision for the 21st century? Yesterday, Premier Wen Jiabao and I have agreed upon our Shared Vision for the 21st Century.

The starting point is the recognition that India-China relations impinge not only on the welfare of the people of the two countries, but also influence regional and global trends.

EXCITING POINT IN HISTORY

We are at an exciting point in history when the centre of gravity of the world economy is moving towards Asia. Just as the world economy was largely about western nations in the twentieth century, it could be largely about Asia in the 21st century. By the mid-21st century, Asia may well account for more than 50 percent of trade, income, saving, investment and financial transactions of the world.

We must, therefore, ensure that India and China cooperate in creating a world of positive externalities and mutual prosperity, rather than one based on calculations of balance of power and animosity. This involves India and China working together closely to ensure a global order in which our simultaneous development will have a positive influence not only on our own economies and our people but also on the rest of the world as a whole. I would like to highlight some changed focus areas for the future.

First, we must bridge the “knowledge gap” between India and China. We need to make much more sustained effort to ensure proper awareness of each other. This not only applies to our culture and history but also to contemporary developments. We need to have more people to people contacts to remove misconceptions and prejudices. We need a broad based comprehensive dialogue at the level of intelligentsia, media, non-governmental professionals and the worlds of culture and the arts.

Second, we need to expand our cooperation in a broad range of functional sectors. This could include learning from each other’s national developmental experiences. We would like to learn from China’s success in the creation of physical infrastructure, strategies to provide productive employment outside the agriculture sector, and China’s experience regarding poverty alleviation. Other areas for potential cooperation are science and technology, public health, education, institution building, water resource management and disaster management.

Third, we should harness our complementarities and synergies in the areas of trade and business. India’s growing consumer market, skilled human resources, and software excellence together with China’s own large market, its manufacturing prowess and cost competitiveness provide the platform for exponential growth in our economic ties. China is already the second largest trading partner of India. Yesterday, we agreed to set a bilateral trade target of 60 billion US dollars by the year 2010.

THE ASIAN WAY

Asia is today more integrated than ever before in terms of trade in goods and services and investment of capital and knowledge. In the East Asian Summit and other fora, we are discussing several constructive ideas for an open inclusive economic architecture from the Indian Ocean to the Pacific. We look forward to working with China in this pursuit. I have spoken before of an Asian Economic Community and I am glad that progress is being made in that direction.

In pursuing these initiatives we will do it and we shall do it the Asian way – avoiding confrontation and building trust, confidence and consensus. It is only in an environment of peace that prosperity in Asia can be sustained. India and China have an important role to play in building peace, security and stability in the region.

At the global level, our two countries should be at the forefront of the emergence of a more democratic global order and of multilateral approaches to resolving global issues. Today’s international institutions, like the UN Security Council, no longer reflect reality and must be democratised.

We have had useful experience of cooperating in the effort to bring about a successful conclusion of the Doha Development Round of the WTO negotiations, placing the development dimension the very heart as it should be. This experience enables us to intensify our efforts to create a more open and equitable trading and financial architecture world wide.

The environment is humanity’s common heritage. The rights of our people to a fair chance to improve their lot cannot be abandoned because of environmental damage caused by others who followed a path which has squandered the earth’s resources.

Burden sharing therefore has to be fair and must take into account historical emissions. The recently concluded Bali Conference provides a framework for future cooperation between India and China on this basis. India and China should continue to work together to strengthen international cooperation on this basis.

ENERGY AND FOOD SECURITY

The rapid growth of India and China will lead to expanding demand for energy. We have no choice but to widen our options for energy availability and develop viable strategies for energy security. We can do much more to jointly develop clean and energy efficient technologies through collaborative research and development. India seeks international cooperation in the field of civilian nuclear energy, including with China.

Another area that merits our attention is food security. Global trends in food production and prices, and changing patterns of consumption are going to put increasing pressure on the availability and prices of basic food items. These trends pose major challenges for how we manage our food economy in the years that lie ahead. Our interests are common and we can learn from each other in the strategies we follow for the development of our agriculture and our economy.

Perhaps the greatest danger to our development comes from extremism of all types, whether in the garb of religion or on the pretext of righting historical wrongs. Recent developments in our neighbourhood have brought home to us again the imperative necessity to collectively fight terrorism and extremism in all its forms. As large and diverse societies, India and China are well placed to demonstrate the benefits of moderation and peaceful co-existence. The rise of non-state actors, often based on intolerance, and narrow minded conceptions of identity, is a threat to all civilised nations.

The responsibility for the further development of India-China relations is truly a shared responsibility. Our governments have an important role to play. But we must also look to you, the intellectuals, thinkers and scholars of China to lead the way by working closely with your Indian counterparts. It is through a free flow of ideas and sharing of different perspectives that our two societies can build upon the edifice of our civilisational links.”

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5. INDIA TO PARTICIPATE IN SHANGHAI EXPO 2010

January 10, 2008 — India has approved participation in the Expo 2010 World Exhibition, Shanghai (May 1 – October 31, 2010). India plans to use its participation to project the progress it has made in rural development, education, telecommunication, science and technology, amongst others, and showcase India’s technological advance and contribution to synthesis nature and technology. World Expos are held once in five years in different cities with specific themes. The theme of the Expo is “Better City, Better Life”.