Amid poll fever, India, China seek to bolster economic ties

china-economicAmid the raging election fever in the world’s most populous democracy, India and China are set to sustain momentum in their bilateral ties as they engage in the third edition of Strategic Economic Dialogue (SED) in Beijing this week.

The meeting between India’s Deputy Chairman of Planning Commission Montek Singh Ahluwalia and Xu Shaoshi, Chairman of China’s National Development and Reform Commission (NDRC), March 18-19 will be the last round of SED under the ruling United Progressive Alliance dispensation (UPA) in India before the May elections. The third edition of SED is expected to encompass a cluster of global economic issues as well as festering bilateral issues like the ballooning trade deficit favouring China.

Launched in September 2001, the SED has evolved as a valuable forum between top-level economic bureaucrats and planners from Asia’s second and third largest economies to engage in a macro dialogue on exchanging perspectives on the global economic situation and exploring new areas of developmental cooperation. The location of The location of Chinese Industrial Parks, a key outcome to emerge from the third summit meeting between the leaders of India and China in October last year, will be among important issues on the table at the talks. Chinese delegations have made exploratory visits to Indian states of Uttar Pradesh, Karnataka, Andhra Pradesh, Tamil Nadu and Maharashtra to determine the viability of setting up Chinese-style business parks. But no final decision has been taken.

china-economic1India is also expected to make a renewed pitch for attracting Chinese investment to bolster its infrastructure, which needs at least 1 trillion dollars over the next few years. India has sought Chinese expertise in developing a high-speed rail network and high-speed tracks. The forthcoming talks are expected to flesh out modalities about China’s assistance in developing high-speed tracks, a more doable project in the near term rather than the long-gestation high-speed rail network.

There are other forums like the commerce ministers’ meeting to address trade deficit, but given the sensitivity of the issue the Indian side is expected to press their Chinese counterparts to show concrete progress in this crucial area. Sadly, despite repeated Chinese assurances, trade deficit has hovered in the range of 30 billion USD. India has been pushing hard for market access for Indian IT and pharma exports, but Beijing is seen to be hedging. China is looking to step up investment in India as a tool to remedy trade deficit. Indian officials argue that if trade imbalance is not fixed soon, it could provide a handle to China-baiters and diminish public support for this crucial relationship in India.

The relationship between India and China continues to be dogged by trust deficit and a decades-old boundary dispute. But economic relations have continued to grow, underlining the political will by both leadership to continue and expand trade and investment to enlarge the constituency of peace. Bilateral trade has surpassed $70 billion and the two Asian giants are hoping to achieve the target of $100 billion by 2015.

Against this backdrop, the two countries are hoping that the SED becomes a premier mechanism of dialogue on economic and planning issues that helps shield this vital strategic relationship from the vagaries of global politics and enable the two Asian powers to create a multi-layered cooperative relationship, with elements of competition dominating over elements over rivalry.

 

 

 

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