Professional Documents
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Semester:
Course Name:
Name of the faculty:
Topic/ Title :
Group Members:
Pratibha Rohal and Shruti Sharma
To
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Page 1
SUMMARY/ ABSTRACT-
This work presents a comparative study of the Indian economy in lieu of the
Chinese economy. All the aspects of the Indian economy are viewed and
presented in contrast to the Chinese model and facts and figures.
A historical introduction is carried on to the recent trends, with details on the
present scenario i.e. How India maintains trading with China in the now,
finally concluding with a succinct on the possible course of action the Indian
government can take to strengthen its interests with the Eastern Dragon
neighbour, China.
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PREFACE/
RELEVANCE OF TOPIC
India and China have come to play an increasingly dominant role in world
economic affairs. Both nations have posted aggressive growth rates and,
amongst other things. China in particular has gained a large footprint in
international trade and investment flows. Today, it is the worlds largest
exporting nation while Indias exports have grown four fold over the period of
2001-2009.
Although both China and India are labor-abundant and dependant on manufactures, their export
mixes are very different. Only one productrefined petroleumappears in the top 25 products
for both countries, and services exports are roughly twice as important for India as for China,
which is much better integrated into global production networks. Even assuming India also
begins to integrate into global production chains and expands exports of manufactures, there
seems to be opportunity for rapid growth in both countries. Accelerated growth through
efficiency improvements in China and India, especially in their high-tech industries, will
intensify competition in global markets leading to contraction of the manufacturing sectors in
many countries. Improvement in the range and quality of exports from China and India has the
potential to create substantial welfare benefits for the world, and for China and India, and to act
as a powerful offset to the terms-of-trade losses other-wise associated with rapid export growth.
More so, India's eastern neighbor China has emerged as its biggest trading partner in the current
fiscal replacing the UAE and pushing it to the third spot, according to a study conducted by PHD
Chamber of Commerce. India-China trade has reached $49.5 billion with 8.7 per cent share in
India's total trade, while the US comes second at $46 billion with 8.1 per cent share and the UAE
third at $45.4 billion with 8 per cent share during the first nine months of the current fiscal, the
study revealed.
India's trade (exports and imports) with China was only of $7 billion in 2004 which rose to $38
billion in 2008 and to $65 billion in 2013.
"India's direction of foreign trade has exhibited a structural shift during the last decade. Trade
volume and trade share of emerging and developing economies has increased while the share of
conventional trading partners has showed a declining trend,
So we can justify the need to study their mutual ties and relations and their trading
patterns that can strongly affect both the economies and even the world economies.
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Acknowledgement
I, Dr. Shruti Sharma and Miss Pratibha Rohal take this opportunity to express our profound
gratitude and deep regards to our mentor and guide Prof. Dr. Tilak Raj for his exemplary
guidance, monitoring and constant encouragement throughout the course of this assignment
project. The blessing, help and guidance given by him from time to time shall carry us a
long way in the journey of life on which we are about to embark, while pursuing this
opportunity and further.
Sir, you gave us this golden opportunity to do this wonderful project, which also helped
us in doing a lot of Research and we came to know about so many new things.
Also, we are making this project not only for marks but to also increase our knowledge.
Thanks again to all who helped us.
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Table of Contents
1. Introduction..3
2. Literature review
3. Methodology
4. History....
5. Economic Comparison.........
6. India-China Bilateral Trade Relationship.
7. Trade Pattern...
8. Potential Areas for Enhancing Bilateral Trade....
9. Recent Developments in India- China Relationship.....
10. Conclusion
11. References
INTRODUCTION
In demographic terms, China and India are the two most important countries in the world and
they are also rapidly becoming the leading powers in economic terms. ChinaIndia relations,
also called Sino-Indian relations or Indo-China relations, refers to the bilateral relationship
between the People's Republic of China (PRC) and the Republic of India.
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India China trade relations are the most important part of bilateral relations between India
and China. These are the two largest developing countries in the world and are currently the most
important emerging giants in the world economy.
The two Asian giants India and China have shown several developments in different sectors
from the early times, which eventually contributed towards a steep rise in the economy of the
respective countries. However, when it comes to comparing the economy of both the countries,
China usually stays on the top. The economists points out, Chinese Government constantly
implies new, which certainly has an impact in the first rising economy. Both the countries are
putting in their best efforts to analyze their core economic strengths and gradually establish
themselves as the superpower in the World Economy.
China and India are the two most populous countries and fastest growing major economies in the
world. The resultant growth in China and India's international diplomatic and economic
influence has also increased the significance of their bilateral relationship.
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Literature Study
In recent years both economies have grown quite faster that have caught the attention of
everybody. Huge literature has been written and is available foretelling how soon these
economies will be the leading economies of the world.
Earlier studies comparing the economies of India and China focused on developments in
the1950s and 1960s. Examples include Chen and Uppal (1971), Swamy (1973),Harris (1974)
and Bergmann(1977).
Now again the interest has become more rigorous in comparative study of two giant economies
largely due to their consistent growth performance in the1980s and 1990s and subsequently their
rise in the world economy and political affairs.(Wu et.al.,2006) .Some authors are interested in
the institutional settings and hence their impacts on economic performance in the two countries
(Huang& Khanna 2003).Others are keen to compare China and Indias performance in specific
areas,Such as steel industry (Etienne, Asteir, Bhushan & Zhong 1992). Some havemade trade
projections particularly Boillot & Labbouz (2006). There have been. Some studies on
Indias Foreign trade policy by Kanagasabapathy et.al. (2006).
Arunachalaramanan et.al., (2011) have tried to relate impact of Yuan Revaluation on Indias trade
and found that despite Rupee getting depreciated with respect to Chinese Yuan our Balance of
trade with neighbour country has worsened. Batra (2004) has tried to calculate the trade potential
of India with all countries and found that bilateral trade with China still holds good potential.
Silvio Beretta and Renata Targetti Lenti (2012) have also studied bilateral trade intensively and
give a comprehensive analysis of commodities traded.
This assignment gives an insight on understanding the bilateral trade that is too complex
and enormous as it includes the individual interests of both the nations, along with their
mutual interest keeping in mind the fact that they play a key role in Asias development as
well and affect the global economic scene.
Methodology
Firstly, we examined Sino-Indian Bilateral trade from 1996 to 2013 for export and import. Next
we calculated commodity share in trade composition taking data from UN Com trade database.
This shows share of various commodities in trade changing in subsequent years. Trade data from
1996-2013are derived from Ministry of Commerce and Industry, Govt. of India
All this data is used to construct pie charts and give a comparative view of their trading positions
over the year. Then the current trends are presented and conclusions are drawn as to how India
and china can grow in synergy.
HISTORY
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India and China are among the oldest civilizations with long history of association. China and
India are two of the worlds oldest civilisations and have co-existed in peace for millennia.
Cultural and economic relations between China and India date back to ancient times. Nathu La
Pass was the famous silk route.The Silk Route not only served as a major trade route between
India and China, but is also credited for facilitating the spread of Buddhism from India to East
Asia.
IndiaChina relations have undergone dramatic changes over the past five decades, ranging
from the 1950s with a deep hostility in the 1960s and 1970s to a rapprochement in the 1980s
and a readjustment since the demise of Soviet Union. The post-cold war era has offered
enormous opportunities to New Delhi and Beijing to move in the direction of a productive
relationship. Both countries have realized the imperative need for cooperation in diverse areas,
especially in the trade and economic domains, in the long-term interest of peace and stability in
Asia as well as for faster economic development and prosperity at home.
India and China are the two giants of Asia of the oldest and living civilization of the world.
Sindhu and Ganges gave birth to Indian civilization, which influenced south and Southeast Asia.
Similarly, Huangghe (Yellow River) and Changjiang (Yangtze River, The longest river of Asia;
flows eastward from Tibet into the East China Sea near Shanghai) gave birth to the Chinese
civilization, which on its part influenced northeast and Southeast Asia. Being neighbours India
and China had established trade and cultural relations since time immemorial. It could be
established from the records that Sino-Indian interface was always a two-way traffic and the two
elements of this exchange could be categorized as material exchange and spiritual cultural
exchange.
This two-faceted exchange was carried through the following four routes of communication:
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ECONOMIC COMPARISON
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CHINA: Since the late 1970s China has moved from a closed, centrally planned system to a
more market-oriented one that plays a major global role - in 2010 China became the world's
largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded
to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for
state enterprises, creation of a diversified banking system, development of stock markets, rapid
growth of the private sector, and opening to foreign trade and investment. China has
implemented reforms in a gradualist fashion.
In recent years, China has renewed its support for state-owned enterprises in sectors it
considers important to "economic security," explicitly looking to foster globally competitive
national champions.
After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued
its currency by 2.1% against the US dollar and moved to an exchange rate system that references
a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi
against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the
dollar from the onset of the global financial crisis until June 2010, when Beijing allowed
resumption of a gradual appreciation. The restructuring of the economy and resulting efficiency
gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a
purchasing power parity (PPP) basis that adjusts for price differences, China in 2012 stood as the
second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar
values of China's agricultural and industrial output each exceed those of the US; China is second
to the US in the value of services it produces. Still, per capita income is below the world average.
The Chinese government faces numerous economic challenges, including:
(a) Reducing its high domestic savings rate and correspondingly low domestic demand
(b) Sustaining adequate job growth for tens of millions of migrants and new entrants to the work
force
(c) Reducing corruption and other economic crimes
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(d) Containing environmental damage and social strife related to the economy's rapid
transformation.
Economic development has progressed further in coastal provinces than in the interior, and by
2011 more than 250 million migrant workers and their dependents had relocated to urban areas to
find work.
One consequence of population control policy is that China is now one of the most rapidly
aging countries in the world. Deterioration in the environment - notably air pollution, soil
erosion, and the steady fall of the water table, especially in the North - is another long-term
problem. China continues to lose arable land because of erosion and economic development. The
Chinese government is seeking to add energy production capacity from sources other than coal
and oil, focusing on nuclear and alternative energy development. In 2010-11, China faced high
inflation resulting largely from its credit-fueled stimulus program.
Some tightening measures appear to have controlled inflation, but GDP growth consequently
slowed to under 8% for 2012. An economic slowdown in Europe contributed to China's, and is
expected to further drag Chinese growth in 2013. Debt overhang from the stimulus program,
particularly among local governments, and a property price bubble challenge policy makers
currently. The government's 12th Five-Year Plan, adopted in March 2011, emphasizes continued
economic reforms and the need to increase domestic consumption in order to make the economy
less dependent on exports in the future. However, China has made only marginal progress toward
these rebalancing goals.
INDIA: India is developing into an open-market economy, yet traces of its past autarkic policies
remain. Economic liberalization measures, including industrial deregulation, privatization of
state-owned enterprises, and reduced controls on foreign trade and investment, began in the early
1990s and have served to accelerate the country's growth, which averaged under 7% per year
since 1997.
India's diverse economy encompasses traditional village farming, modern agriculture,
handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than
UNIVERSITY BUSINESS SCHOOL
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half of the work force is in agriculture, but services are the major source of economic growth,
accounting for nearly two-thirds of India's output, with less than one-third of its labor force.
India has capitalized on its large educated English-speaking population to become a major
exporter of information technology services, business outsourcing services, and software
workers.
In 2010, the Indian economy rebounded robustly from the global financial crisis - in large
part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms.
However, India's economic growth began slowing in 2011 because of a slowdown in government
spending and a decline in investment, caused by investor pessimism about the government's
commitment to further economic reforms and about the global situation. High international crude
prices have exacerbated the government's fuel subsidy expenditures, contributing to a higher
fiscal deficit and a worsening current account deficit.
In late 2012, the Indian Government announced additional reforms and deficit reduction
measures to reverse India's slowdown, including allowing higher levels of foreign participation
in direct investment in the economy.
The outlook for India's medium-term growth is positive due to a young population and
corresponding low dependency ratio, healthy savings and investment rates, and increasing
integration into the global economy. India has many long-term challenges that it has yet to fully
address, including poverty, corruption, violence and discrimination against women and girls, an
inefficient power generation and distribution system, ineffective enforcement of intellectual
property rights, decades-long civil litigation dockets, inadequate transport and agricultural
infrastructure, limited non-agricultural employment opportunities, inadequate availability of
quality basic and higher education, and accommodating rural-to-urban migration.
Page 12
Factors
India
China
GDP
$4.99
trillion
(2013est.)
$13.39
trillion
(2013est.)
(purchasing
$4.833
trillion
(2012est.)
$12.43
trillion
(2012est.)
power parity)
$4.63
trillion
(2011est.)
$11.54
trillion
(2011est.)
GDP
real
growth rate
3.2%
(2013est.)
7.7%
(2013est.)
5.1%
(2012est.)
7.7%
(2012est.)
9.3%
(2011 est.)
7.5%
GDP
per
capita (PPP)
(2011 est.)
$4,000
(2013est.)
$9,800
(2013est.)
$3,900
(2012est.)
$9,100
(2012est.)
$3,800
(2011est.)
$8,300
(2011est.)
agriculture: 17.4%
agriculture: 10%
composition by
industry: 25.8%
industry: 43.9%
sector
services: 46.1%
GDP
(2013 est.)
Population
below
6.1%
poverty
(2013)
line
Household
income
lowest
or
10%: 3.6%
lowest
10%: 1.7%
highest
10%: 30%
consumption by
percentage
only (2009)
share
Inflation
rate
9.6%
(2013est.)
Page 13
2.6%
(2013est.)
(consumer
797.6million
prices)
Labor force
agriculture: 49%
agriculture: 33.6%
occupation
industry: 20%
industry: 30.3%
services: 36.1%
(2012 est.)
Unemployment
8.8%
(2013est.)
rate
4.1%
(2013est.)
4.1%
(2012est.)
which
excludes
36.8
family income -
37.8
(2004)
(1997)
47.3
(2013)
47.4
(2012)
Gini index
Budget
Industries
revenues: $181.3
billion
revenues: $2.118
trillion
est.)
est.)
steel,
equipment,
petroleum,
cement,
transportation
mining,
Page 14
textiles
and
petroleum;
cement;
fertilizers;
consumer
apparel;
chemicals;
products
(including
footwear,
electronics);
toys,
food
and
processing;
rail
locomotives,
cars
ships,
and
aircraft;
telecommunications
equipment,
agricultural
fish
production
growth rate
Agriculture
products
output;
rice,
wheat,
fish
Exports
Exports
$313.2
commodities
billion
(2013
est.)
$2.21
trillion
(2013
est.)
electrical
vehicles, apparel
and
other
machinery,
(2012)
Imports
$467.5
billion
(2013
est.)
$1.95
trillion
(2013
Page 15
est.)
Imports
commodities
Imports
partners
5.1% (2012)
Debt - external
est.)
est.)
est.)
Exchange rates
58.68
(2013
est.)
53.437
(2012
est.)
6.2
45.726
(2010
est.)
6.3123
(2012
est.)
(2009)
6.7703
(2010
est.)
48.405
43.319 (2008)
(2013
est.)
6.8314
(2009)
6.9385 (2008)
Fiscal year
1 April - 31 March
calendar year
Public debt
51.8%
of
GDP
(2013
est.)
22.4%
51.7%
of
GDP
(2012
est.)
26.1%
of
GDP
of
(2013
GDP
est.)
(2012)
government
US$1.66
Page 16
debt,
trillion)
which
in
China's
2011;
data
of
performing loans
Railway
debt,
China
Asset
of
foreign
exchange
est.)
and
gold
est.)
Current
-$74.79
billion
(2013
est.)
$182.8
billion
(2013
Account
$9.33
est.)
Balance
GDP
(official
exchange rate)
trillion
the
best
measure
for
Page 17
foreign
est.)
investment - at
est.)
home
est.)
Stock of direct
foreign
est.)
est.)
investment
abroad
est.)
Market value of
publicly traded
est.)
est.)
shares
est.)
est.)
8%
Central
bank
discount rate
(31
December
2010
est.)
bank
est.)
est.)
est.)
est.)
Stock of narrow
money
est.)
est.)
est.)
est.)
prime
lending rate
Stock
of
domestic credit
Page 18
Stock of broad
money
est.)
est.)
est.)
Taxes and other
household
consumption: 56.4%
household
consumption: 36.3%
composition, by
government
consumption: 12.4%
government
consumption: 13.7%
end use
investment
investment
investment
revenues
Budget surplus
(+) or deficit (-)
GDP
Gross
saving
national
in
inventories: 8.2%
in
fixed
in
capital: 46%
inventories: 1.2%
31.8%
22.2%
(2013 est.)
(2013 est.)
33.7%
of
GDP
(2013
est.)
50%
28.8%
of
GDP
(2012
est.)
51.2%
Page 19
of
of
GDP
GDP
(2013
est.)
(2012
est.)
Page 20
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Page 27
China has emerged as Indias largest trading partner after it replaced the United States in March
2008. When India initiated its comprehensive reforms in 1991, the level of bilateral trade
between the two countries was insignificant as the trade basket was restricted to a limited
number of products. However within a short period, China has become Indias single most
important trading partner even though Indias bilateral trade deficit with China reached an
unsustainable level of US$ 39.1 billion in 2012 (IMF, 2013b). Policy makers will have to find
ways to manage this huge deficit given that India can neither afford to limit its economic
engagement with China nor continue with such a huge bilateral trade asymmetry for a long
period of time.
Page 28
\Year 2009-2010
.
1
2
3
EXPORT
%Growth
India's
11,617.88
178,751.43
2010-2011
2011-2012
2012-2013
2013-2014
15,482.70
18,076.55
13,534.88
14,824.36
33.27
16.75
-25.12
9.53
251,136.19 305,963.92
300,400.68
314,405.30
Total
Export
4
5
%Growth
%Share
IMPORT
7
8
%Growth
India's
40.49
21.83
-1.82
4.66
6.5
6.17
5.91
4.51
4.72
30,824.02
43,479.76
55,313.58
52,248.33
51,034.62
41.06
27.22
-5.54
-2.32
369,769.13 489,319.49
490,736.65
450,199.79
288,372.88
Total
Import
9
10
%Growth
%Share
11
TOTAL
28.23
32.33
0.29
-8.26
10.69
11.76
11.3
10.65
11.34
42,441.90
58,962.46
73,390.13
65,783.21
65,858.98
38.93
24.47
-10.37
0.12
620,905.32 795,283.41
791,137.33
764,605.09
TRADE
12
13
%Growth
India's
467,124.31
Total Trade
14
15
%Growth
%Share
9.09
32.92
28.08
-0.52
-3.35
9.5
9.23
8.32
8.61
Page 29
Reflecting the synergy in bilateral trade relations, total trade between the two countries has also
risen more than 20-fold, from US$ 3.6 bn in 2001 to US$ 73.9 bn in 2011, underlined by rise in
both Chinas exports to as also imports from India.
During the period 2001-2011, Chinas exports to India rose from US$ 1.9 bn in 2001 to touch
US$ 50.5 bn in 2011, with a CAGR(Compound Annual Growth Rate) of 38.8% during the
period. As a result, Indias share in Chinas global exports has risen from 0.7% in 2001 to touch
2.7% in 2011. Chinas imports from India have also risen from US$ 1.7 bn in 2001 to US$ 23.4
bn in 2011, with a CAGR of 30%. Indias share in Chinas global imports has also risen from
0.7% to 1.3% during the period.
Page 30
Machinery and electrical & electronic equipments are the two largest items of Chinas exports to
India, with a combined share of 45% of Chinas total exports to India during 2011 (24.4% &
21.3% share, respectively).Chinas exports of these two items to India have, in fact, registered a
significant rise in recent years, with the result that Chinas trade surplus with India for these two
items are as high as US$ 11.9bn in the case of machinery, and US$ 10.3 bn in the case of
electrical and electronic equipment.
Other major items of Chinas exports to India include: organic chemicals, fertilizers, articles of
iron and steel, iron and steel, and plastics and articles. For all these major items, India has
emerged as one of the leading export destinations for China.
For instance, India is the 6th largest global market for Chinas exports of machinery (with a share
of 3.5% of Chinas global exports in 2011); 8th largest global market for Chinas exports of
electrical and electronic equipment (2.4% share); 2nd largest global market for Chinas exports
of organic chemicals (11.8% share); largest global market for Chinas exports. of fertilizers
(44.7% share); 4th largest global market for Chinas exports of articles of iron and steel, and iron
and steel (5.9% & 4.6% share, respectively); 7th largest global market for Chinas exports of
plastics and articles (2.5% share).
Chinas Imports from India Major Commodities
Two items, viz. ores, slag and ash, and cotton dominate Chinas imports from India, together
accounting for 32% of Chinas total imports from India during 2011. Other major items of
Chinas imports from India include copper and articles, pearls and precious stones, organic
chemicals, and plastics and articles.
As in the case with exports, India has emerged as an important global import source for China.
While India has emerged as the 3rd largest global source for Chinas imports of ores, slag and
ash in 2011 (accounting for 6.9% share of Chinas imports), India is the leading global source for
Chinas imports of cotton (22% share). Further, Indias is the 8th leading global source for
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Chinas imports of copper and articles (4% share), and the 4th largest global source for Chinas
imports of pearls and precious stones (8% share).
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Bilateral trade relations between India and China has witnessed a significant rise in recent years,
with total trade (exports plus imports) between them having risen more than 20-fold, from US$
3.6 bn in 2001 to as much as US$ 73.9 bn in Reflecting on the higher growth in Chinas exports
to India, as compared with import growth from India, Chinas trade surplus with India has
witnessed a sharp rise from a meagre US$ 0.3 bn in 2001 to touch US$ 27.2 bn in 2011. India
has emerged as one of the major destinations for Chinas exports.
In 2011, India was the 7th largest export market for China, up from the 19th position in 2001.
However, as regards Chinas imports, India is still a marginal partner at the 18th position in 2011,
a slight improvement from the 20th position in 2001.
To enhance bilateral trade relations, and in particular to address Indias rising trade deficit with
China, strategy to boost trade relations with China would entail identification of potential items
of Indias exports to China, which would be based on the following analysis:
Identification of major items in Chinas import basket, and share of India in each product
line.
Selection of potential export items, based on low share of India in Chinas import basket
of major commodities, keeping in view Indias global export capabilities. This would
entail identification of potential export items under each product category.
Page 33
Established during the visit to India of H.E. Mr. Wen Jiabao, Premier of the State
Council of the Peoples Republic of China in December 2010, the Dialogue is aimed at
improving macro-economic policy coordination, promoting exchanges on economic issues
and enhancing India-China economic cooperation. The 1st Dialogue had been successfully
held at Beijing in September 2011 where the two sides agreed to constitute five Working
Groups on policy coordination, infrastructure, energy, environment protection and hightechnology. A working level delegation from China visited New Delhi in March 2012
following which the five Working Groups met in Beijing in the months of August and
September 2012. This preparatory work has contributed immensely to the successful
deliberations in and outcomes of the 2nd Dialogue.
3.
During the 2nd meeting of the Dialogue, the two sides discussed a wide range of topics
including greater cooperation at the global level, strengthening communication on macroeconomic policies, deepening and expanding trade and investment and promoting bilateral
cooperation in the financial and infrastructure sectors. The proposals and recommendations
made by the five Working Groups were considered during the 2nd Dialogue and directions
given for their future activities.
4.
The two sides agreed that in the current global economic situation it was important to
raise the level of economic engagement between India and China. The two sides agreed on
the
following:
(i) Cooperation at the global level: Exchanging views on current global economic and
developmental challenges, the two sides recognized that as major developing economies,
they needed to maintain close coordination and communication to pursue their common
UNIVERSITY BUSINESS SCHOOL
Page 34
interests. Among them is the reform of international monetary and financial systems,
stabilizing the volatility in global commodity markets, working towards sustainable
development and climate change goals, and ensuring food and energy security.
(ii) Strengthening communication on macroeconomic policies: Following detailed
discussions on the global and national economic situations, the two sides agreed that
development growth trends globally have weakened as a result of a number of factors since
the onset of the global financial crisis. This included weakening demand in the developed
markets, the ongoing Eurozone crisis, lower business confidence, and growing inflationary
trends. Both sides seek to maintain continued economic growth while adjusting
manufacturing and services, upgrading levels of technologies and skills, while developing
the hard and soft infrastructure for encouraging economic growth. The two sides agreed that
they would regularly conduct joint studies on issues of mutual interest, focusing on benefits
of best
practices.
(iii) Deepening and expanding trade and investment: With a view to promoting greater
economic and commercial engagement, both sides recognized the need to explore potential
synergies in areas where the two sides have mutual complementarities, improve trade and
investment environments, work towards removing market barriers, enhance cooperation in
project contracting, deepen business to business exchanges, improve transportation links,
encourage greater bilateral investment and work towards achieving a more balanced and
sustainable bilateral trade.
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support the requirements of priority sectors particularly the infrastructure sector having
significant scope for furthering economic development.
5. The main outcomes of the Working Groups are as follows:
6.
(a) In the Policy Coordination Working Group, both sides discussed plan priorities and
ways and means of achieving plan targets recently unveiled in their 12th Five Year Plans.
They exchanged views on skills development and industrial park development. The two
sides also submitted assessment reports on the investment environments in each others
country based on the experiences of the enterprises of the two countries and discussed
possible solutions to improve the investment environment. The two sides have also
agreed to carry out joint studies on planning cooperation and skills development for
employability, and
entered
into
related
MoUs.
(b) In the Infrastructure Working Group, with its focus on enhancing railway
cooperation, both sides exchanged views on the broad policies and plans for railway
development in each others country. The two sides also discussed high-speed rail
development programme, heavy haul and station development and entered into an MoU
to
exchange
views
and
other
related
information
in
these
areas.
(c) In the Energy Working Group, both sides briefed each other on the development of
the power sector in the two countries, the ongoing cooperation in the power equipment
sector, opportunities and challenges in the wind energy sector, the possibility of Chinese
power equipment manufacturers setting up service centres in India and relevant policy
environment to support the ongoing cooperation, and reviewed the small hydro power
workshop that was successfully held in Beijing in October 2012.
d) In the Environmental Protection Working Group, the two sides agreed to enhance
cooperation in the implementation of energy efficiency projects through energy service
companies (ESCOs), encouraging visits to industrial and manufacturing centres excelling
in energy efficient initiatives, cooperate and jointly develop testing protocols and
standards and have entered into a related MoU. The two sides also exchanged views on
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and
water-efficient
irrigation
systems.
(e) In the Hi-Technology Working Group, the two sides agreed to enhance cooperation
in the Information Technology and Information Technology Enabled Services (IT/ITES).
Both sides also agreed to carry out / support joint studies to better understand the IT/ITES
markets of each country and have entered into a related MoU in this area. The two sides
also reached a consensus to explore the possibility of working together for developing
common standards for digital TV, audio and video codec standards and mobile
communication technology.
7. The following Memorandums of Understanding were signed by the two sides in the
presence of
the
delegation
leaders:
in
the
Field of
Energy
Efficiency.
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Services Companies (NASSCOM), India and the China Software Industry Association
(CSIA) on Enhancing Cooperation in the IT/ITES Sector.
8. The two sides agreed that the 3rd India-China Strategic Economic Dialogue will be
convened in China in 2013. They also agreed that prior to the 3rd Dialogue, the Working
Groups would meet to implement the consensus and decisions agreed to by the two sides
at the 2nd Strategic Economic Dialogue.
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Conclusion/ Inferences
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Positive evaluation-
1. India assumes Chinas rise as Asias rise but China sees its rise as
separate from Asia's destiny. When it does pay lip service to the "rise of the
Asian century" discourse, it is to reach out to an Asia that might challenge
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References
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