The two South Asian titans have become the best example of neighbours working together for mutual advantage, especially in economic matters, despite distrust and unsolved disputes, writes MAHENDRA VED
INDIA has the Himalayas and China, the Great Wall. Bigger than both is the barrier of mutual distrust. The rising graph of economic ties, however, helps the two neighbours to scale it, even as the West stares at yet a second economic crisis in three years.
Both are going to be affected, like much of the world. But with their large domestic markets and economies on overdrive, they hope to soften the impact. And what better than to look at each other?
Heirs to ancient civilisations, they can resort to universal give and take: If you run short of something at home, you knock on the door of your neighbour.
With that in mind, India also hosted last week another neighbour, Pakistan, that has been wary of according Delhi the most favoured nation (MFN) status, fearing its market would be hit. A boost in bilateral trade, the opening of land routes and bank branches are on the cards.
The two South Asian giants, now on improved terms, on economic ties at least, plan to link the South Asian Free Trade Agreement (Safta) to Asean in the east and in the west, the Economic Cooperation Organisation Trade Agreement (Ecota) covering Turkey and Central Asia.
Between India and China, telecommunications and heavy machinery, chemicals and information technology have replaced the age-old silk and porcelain, to underscore the continuity in ties that represent a third of humanity and the world’s two fastest-growing economies.
Together, perhaps, they are today the best example of neighbours working together to mutual advantage — despite distrust, differences and unsolved disputes. Not only that, they remain avid competitors seeking markets and influence in other countries.
No doubt, they have been sparring every now and then on a range of issues. The long border comes alive frequently, egging on the military and putting the diplomats on their toes. Tibet’s Dalai Lama, India’s “honoured guest”, remains a concern for China that continues to be sceptical of India’s nuclear ambitions and its growing ties with the United States.
India is wary of what it considers China’s attempts to surround it with “string of pearls” naval bases. Pakistan’s ties with China have become more demonstrative recently as Pakistan-US ties sour. This summer saw the Chinese military making its debut on India’s western front in a joint military exercise in Pakistan.
The most recent tiff occurred off the Vietnam coast where an Indian naval ship was “ambushed” by the Chinese asking it to clear out. China claims sovereignty over the South China Sea and has not taken well to India’s exploration for hydrocarbons jointly with Vietnam.
The list could get longer, with no solutions in sight. This is precisely why both realise the need to be pragmatic on economic ties. That the two are busy transforming their respective economies makes it all the more imperative.
Boosting economic ties, managing the elements of competition bilaterally as well as in third countries and building upon areas of convergence also promotes peace. This is good, since neither wants an escalation of tensions. That it would be mutually destructive seems to have been realised.
This thinking formed the backdrop to the first India-China Strategic Economic Dialogue (SED) that took place in Beijing on Sept 26-27. The timing was opportune in that bilateral trade is booming. It is likely to rise to US$70 billion (RM223 billion) this year from US$61.74 billion last year, and is expected to hit US$100 billion by 2015.
India is concerned about a deficit that is growing. It is also conscious of the fact that China dominates global trade, selling and buying in a month more than India does annually, and it is the key partner of all big economies.
The Chinese view Indian IT with awe, but have restricted its entry — just the way their entry in Bangaluru, the Indian IT hub, is kept under constant, suspicious watch.
Delhi wants Beijing to remove market barriers for its pharmaceuticals awaiting clearance since 2002. Their entry is limited by Chinese rules that demand local clinical trials and drug approvals even for products with existing international approvals.
Numbering around 250 now, Indian enterprises have to compete in a state-controlled marketplace that does not recognise brands, even if they are selling in more than 50 nations. Only recently have they begun to do business with local governments and state-owned companies.
A new chief executive officer forum, to be co-chaired by the Reliance Group’s Anil Ambani, is expected to meet soon and boost bilateral economic ties. There is also mutual, if not often articulated, respect. Indians acknowledge that their country’s infrastructure needs for power and telecoms equipment can be met only by Chinese manufacturers, The Hindustan Times said on the eve of the SED.
The deputy chairman of India’s Planning Commission, Montek Singh Ahluwalia, set the tone of the SED saying: “We in India are deeply impressed by your progress and we believe there are many lessons from your experience that may be valuable to us.”
Stressing “profound changes in the world’s economic and political landscape”, Zhang Ping, director of China’s National Development and Reform Commission, said: “Since we are at the important stages of acceleration of industrialisation and urbanisation, our two countries are faced with similar or even identical problems in the course of development.
“Closer cooperation will not only benefit our two countries but also help boost the confidence of developing countries as a whole. The healthy development of Indian and Chinese economies will have a positive impact on the recovery and growth of Asian and world economies.”
The first SED has achieved positive results, said Chinese Premier Wen Jiabao, who had been instrumental in establishing the dialogue when he met Prime Minister Manmohan Singh last December.
“The goal of the dialogue is to further strengthen our mutual trust under the current situation and to expand our strategic partnership of cooperation. Maintaining the sound and stable development of bilateral relations is of great importance to the two countries, the region and the world as a whole.”
That sums up the exercise.
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