Zhong Shan's visit helps promote India-China economic Partnership

By Rabi Sankar Bosu

On March 8, Chinese Foreign Minister Wang Yi, on the sidelines of the first session of the 13th National People's Congress, interacted with media on China's major country diplomacy in the new era in which he set the tone for future Sino-Indian ties. Commerce Minister Zhong Shan's visit to India with a 30-member business delegation this week demonstrated that both China and India are working to improve their trade and economic relations and overcome the bitter disputes of the past.

Zhong Shan's visit is one of the most significant bilateral engagements between Asia's two biggest countries, which were locked in a long-standing border dispute last year. His visit is an attempt to "reset" Sino-Indian ties this year in the run-up to a meeting between the Chinese and Indian top leaders at the Shanghai Cooperation Organization summit in Qingdao this June. The Chinese Commerce Minister came to New Delhi to participate in the 11th Joint Economic Group (JEG) meeting with his Indian counterpart Suresh Prabhu on March 26, which has yielded a host of major commercial outcomes. The JEG was formed in December 1988 during the 'path‐breaking' visit of then Prime Minister Rajiv Gandhi to Beijing.

Chinese Minister of Commerce Zhong Shan attends a press conference in Beijing on March 11, 2018. [Photo: dfic.cn]

Zhong Shan's visit took place at a very important juncture when the USA and China are entering a cold spell, with a possible trade war between the world's two largest economies. The Chinese commerce minister called for cooperation between India and China against the "acts of unilateral protectionism" taken by U.S. President Donald Trump. "It is in the interest of both China and India to uphold the authority and efficacy of the multilateral trading system," Zhong said. In this perspective, it can be said that the Chinese commerce minister's visit offered India a golden opportunity to warm up the trade ties with the world's second largest economy in the face of growing American protectionism.

Trade is a very important aspect of bilateral ties between India and China. The meeting between Indian and Chinese commerce ministers was mainly dominated on the issues like reducing India's trade deficit with China, India's anti-dumping and anti-subsidies action against Chinese imports, fixation on a Free Trade Agreement (FTA) and India's participation in the Belt and Road Initiative. 

Here, it is worth mentioning that China has become India's largest trading partner, top source of imports and fourth largest export market. Moreover, India is China's largest trading partner in South Asia and ninth largest export market in the world. Although China-India trade cooperation has deepened over the years, India's trade deficit with China has grown wider in the last three years. According to Indian media reports, in 2016-17, India's trade deficit with China was over $51 billion, which was almost half of the country's total trade deficit with all trade partners. While India imported goods from China worth $61 billion, its exports to China were at $10 billion. 

On the other hand, Chinese customs data showed on March 8 that Sino-Indian bilateral trade surged 26.1 percent on a yearly basis in the first two months of 2018. Today the China-India bilateral trade volume has reached an all-time high of 84.4 billion U.S. dollars. Cumulative Chinese investment in India is nearly 5 billion US dollars. Over 500 Chinese companies have established themselves in India. Both countries are now aiming for $100 billion dollars of trade in the near future. In 2017, Chinese companies invested roughly $311 million in India and Indian companies invested close to $150 million in China, indicating an upward growth trajectory in the investment relationship between the two nations.

During the meeting with his Chinese counterpart, in order to narrow India's widening trade gap, with the world's second-largest economy, Suresh Prabhu exchanged India's lists of demands and discussed ways to meet them. He urged China to open up its markets for agricultural products like rapeseed, soybeans, basmati and non-basmati rice, fruit, vegetables and sugar. In recent years, Chinese consumers have shown an increasing appetite for Indian red tea, coffee, fruit and seafood. Truly, if China increases its market access for Indian food, the latter's traditional basmati rice, mango, and red tea will surely win the hearts of food-loving Chinese people.

It is encouraging to note that Zhong Shan "welcomed Indian investment in China and promised to address the trade deficit between the two countries." He also invited Indian companies to attend the China International Import Expo to be held in Shanghai in November and suggested that India might be able to increase exports to China via the expo. It should be noted here that during Zhong's tour in India, businesses of both countries signed 101 trade agreements, valued at nearly $2.4 billion. 

Seeking closer ties with India, the Chinese minister suggested a seven-point proposal along with a Free Trade Agreement (FTA) to comprehensively boost trade and economic cooperation between the two Asian giants. It's a fact that despite the tremendous economic growth of both countries, there is no FTA between the two sides given India's concerns about it benefitting China much more than India.  Zhong's visit may lead to renewed hope for a FTA between the two sides in due course, which will be very useful in enhancing trade and economic ties between both countries. The two ministers have demonstrated flexibility to reach at an early date a modern, comprehensive and mutually-beneficial Regional Comprehensive Economic Partnership (RCEP) agreement of high standards.

In an exclusive interview with Indian newspaper The Hindu, the Chinese Commerce Minister emphasized the promotion of the synergy between China's Belt and Road initiative and India's development strategies, including the "15-year Development Agenda," "Make in India," and "Digital India" to deepen mutually-beneficial cooperation and share development experience. There is no doubt that India's development strategies will get a boost if New Delhi joins the latter's ambitious initiative as economic integration would be good for both sides.

However, in spite of booming trade, there is a lot of catching up to do still. The two countries have vast room for cooperation in trade, investment, infrastructure, IT, the Internet, culture, tourism, medicine, and healthcare. If India and China are to develop a new "strategic partnership" on the trade front, both countries should forge a friendly relationship, and resolve trade differences peacefully, which is critical for changing the destiny of South Asia.

(Rabi Sankar Bosu, Secretary, New Horizon Radio Listeners' Club, based in West Bengal, India)