ISSN 2330-717X

India-China Economic Engagements In A Global Context – Analysis

There are various layers of India’s economic engagements with the rest of the world, including in the region. These together have important implications for India-China bilateral economic pursuits.

By Ram Upendra Das and Reena Marwah

Prime Minister Modi’s visit to China is being analysed in different quarters and the trend will remain so in examining the specifics. However, India-China relations in general and economic relations in particular, would have to be placed in an overall context. While the context would determine the bilateral, the converse would also be true.

With a GDP rate of growth of 7 % in 2014-15 and envisaged to grow at 7.5 % and more in the coming fiscal year, the Indian growth trajectory is visibly vibrant. India’s footprint is expanding – not in terms of territorial expansion or maritime circumcising, but in terms of its emergence and visibility as a responsible partner of the developing world, and an engine of growth in the regional and global arena.

There are various layers of India’s economic engagements with the rest of the world, including in the region. These together have important implications for India-China bilateral economic pursuits. First and foremost, is the South Asian region which is followed by India’s Act East Policy. But the engagements cannot stop at that. India’s economic linkages with the Central and West Asia are important, too. Beyond this are the imperatives of more intensive partnerships in Africa and Latin America, alongside the Caribbean region. On the other hand, with India’s economic dynamism, one must not lose sight of its economic dialogue with the developed world. Each of these need serious consideration.

India’s immediate neighbours in South Asia are the most crucial partners. They both need each other and going by the Indian civilizational ethos India has always believed in shared prosperity. To assess the above, it would be useful to question, at the outset, if India has been a responsible partner to neighbouring countries in South Asia? India has remained one of the most important trade partners of the SAARC members. It has also provided duty free access to goods of five countries of the SAARC. A rather little known fact has been that the trade relations with Pakistan have made substantive progress since the joint statement between the two countries in 2011 with Pakistan moving from positive list of imports from India to negative list. India reciprocated with relaxing restrictions on investment from Pakistan. More recently, the land settlement between India and Bangladesh can only augur well for the business sentiments in the two countries. With Sri Lanka, Nepal and Bhutan, India has already forged closer and stronger economic ties as the statistics would suggest. In Afghanistan, India’s presence in terms of development assistance is quite well-known.

India’s humanitarian assistance to Nepal, Bangladesh, Sri Lanka, and Maldives during times of natural disasters like the earth-quake, tsunami etc. have always been appreciated. As Prime Minister Modi rightly articulated during the 18th SAARC Summit at Kathmandu (2014) “India’s vision for the region rests on five pillars – trade, investment, assistance, cooperation in every area, contacts between our people – and, all through seamless connectivity. There is a new awakening in South Asia; a new recognition of inter-linked destinies; and, a new belief in shared opportunities.” By no means are such pronouncements mere words.

In terms of India’s Act East Policy, the comprehensive economic partnership agreements with Japan, South Korea, Malaysia, Singapore and ASEAN have remained building blocks for a larger Asian economic integration under the aegis of Regional Economic Cooperation Agreement (RCEP) within the ASEAN+6 configuration. However, the shared prosperity must extend to countries in the extended neighbourhood of East Asia to cover Cambodia, Laos, Myanmar and Vietnam (CLMV) countries as these countries provide avenues to evolve Regional Value Chains (RVCs), of which India could be an active part. The Eagle must not abandon the next door Nest country i.e. Thailand which is strategically positioned to be a bridge for India to Act East. A comprehensive agreement with Thailand including trade in goods, trade in services and investment would deepen the economic linkages with this ‘culturally-similar-bridge-country’. In addition, negotiations with Indonesia, Australia and New Zealand must also be completed so as to make India a pro-active economic player in the RCEP negotiations. This is crucial for two prime reasons: first, since this would be an important arrangement to interact with China, especially in terms of setting the rules of the game while maintaining ‘ASEAN centrality’; and second, because RCEP assumes special meaning for both India and China in the wake of mega-economic groupings such as TPP and TTIP of which both are not members. The FTAAP under APEC remains elusive for India as it is still not part of APEC, which in any case has not much to show as any meaningful success in concrete economic terms.

India along with other SAARC members can serve as an economic hub connecting the East and South-east Asian sub-regions with Central and West Asian regions to tap the economic, energy and natural resource complementarities. On the other hand, China is actively present in major sectors of significance be it in South Asia, East and South-East Asia or Central Asia. Similar, is the case in terms of economic presence of China in Africa and Latin America / Caribbean. Moreover, India and China interact closely in BRICS, AIIB, G-20 and in climate change negotiations and at the WTO.

It is this wider canvas, in which India-China economic engagements need to be painted. Nevertheless, India cannot wish away deeper economic cooperation with the US and major economies in the EU. May be new efforts for a new global reconfiguration is needed that includes Japan, United States, Russia, India and China (JURIC) which sets a new global economic order along with the EU. If at all, India-China economic engagements need to be constructed in this new economic ambience.


About the Author

Dr. Ram Upendra Das
Dr. Ram Upendra Das
Dr. Ram Upendra Das is Professor at the Research and Information System for Developing Countries (RIS), New Delhi. He is also Honorary Fellow at the Academy of World Watch, Shanghai, China; Honorary Professor at the New Delhi Institute of Management and Member, Academic Advisory Council of the Birla Institute of Management and Technology, Noida. His broad areas of specialisation include International Economics and Development Policy. During his research experience spanning more than 25 years, he has conducted and supervised a number of studies for various institutions including the ADB, Commonwealth Secretariat, ILO, EXIM Bank of India, SAARC Secretariat, UNDP, UNESCAP and the World Bank. He has conducted various studies, including for the inter-governmental Joint Study Groups (JSGs), and international negotiating processes on behalf of the Government of India in the context of India’s economic engagements with other countries and groupings. These include Sri Lanka, Pakistan, Nepal, Maldives, SAARC, Thailand, ASEAN, Singapore, GCC, Indonesia, Malaysia, Australia and New Zealand. He also represented India to the Track II Study Group of the CEPEA under the East Asia Summit process. He contributed to drafting of the SAFTA Treaty and SAARC Agreement on Trade in Services (SATIS) for the SAARC Secretariat. He also contributed to resolving complex issues during the India-ASEAN trade negotiations. More recently, he is involved in an inter-governmental study on FTA between India and the Eurasian Economic Community comprising Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan. He has also handled the issue of rules of origin negotiations for all the countries with which India has been engaging under trade agreements with countries mentioned above, as well as the EU, MERCOSUR, Japan and South Korea. He has been member of various committees and expert groups of the Indian government. He was invited as a State Guest by the US Department of State under the IVLP and the Government of Indonesia under the Programme viz. Presidential Friends of Indonesia; and was given a Certificate of Appreciation by the Government of Maldives for his Capacity Building Modules on Macroeconomic Modelling for the Maldivian government officials. He was invited to give special address on ‘Regional Economic Integration in Central Asia’ during the 2012 SPECA Economic Forum, organized by UNESCAP and UNECE held in Bangkok. He has written several invited research papers and presented them at international conferences held in India and abroad at institutions of eminence in the US, Europe and Asia. He has numerous publications to his credit on issues relating to international economics and development, including peer-reviewed journals and books. The most recent books include Perspectives on Rules of Origin, Palgrave-Macmillan: UK (2011) and Regional Trade and Economic Integration, World Scientific: Singapore and New Jersey (2012) and Meaning of India Economic Dynamism for East Asia, RIS and ERIA: Jakarta. He has written articles in leading national and international newspapers/magazines and has been interviewed in both print and electronic media. He obtained his Ph.D. and M.Phil degrees in Economics from the Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi.

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