India-China Forge Economic Partnership at Second Strategic Economic Dialogue

Delhi - IndiaIndia and China are quite looking to take their thriving economic relationship to a new high. This week, delegates from East Asia’s 2 fastest-growing economies met in Delhi for the second official India-China Strategic Economic Dialogue. Initiated in 2010 during a visit to India by Chinese Premier Wen, the India-China Strategic Economic Dialogue is a forum at which the two countries share thoughts on mutual economic issues, promote macroeconomic coordination, and enhance political and economic cooperation. This week’s conference also featured discussions on expansion of bilateral trade and partnerships in key economic sectors. By the meeting’s end, two economic giants signed 11 agreements enumerating over US$5 billion in direct investment. Particular focus was placed on issue of trade imbalances between the 2 countries and Chinese investment in India’s underdeveloped infrastructure sector as a possible solution. Despite the fact that China is India’s largest trading partner, boasting a US$75 billion relationship, India is stuck as import-heavy partner, running a US$40 billion trade deficit. Further, China’s direct investment in India is dwarfed by that of other regional economic giants, such as Japan. “A larger role for China in India’s infrastructure projects can come only when some of these serious economic divergences get resolved,” said Brahma Chellaney, Indian strategic affairs analyst. Given that India expects to spend close to US$1 trillion on infrastructure development over the next five years, China has a fighting chance to overtake its regional adversary and emerge as the Asia’s largest provider of Indian FDI. However, there are fundamental political barriers to an enhanced economic union. On forefront of these is a long-standing territorial dispute, which originated in 1962. To this day, India claims some 10.000 miles of territory currently occupied by China in the northern Himalayas, while China claims the bordering Indian state of Arunachal Pradesh. While this no longer poses as severe an impediment to Sino-Indian relations as it did 30 years ago, tensions were renewed when India, mere days before the summit, began issuing visas to Chinese passport-holders featuring a map that incorporates disputed areas into India. This was performed in response to new Chinese e-passports that show a similar map labeling both regions as part of China. These recent developments, in addition to China’s status as one of Pakistan’s major arms suppliers, have the potential to disrupt any long lasting trade relationship. However, despite worries of the contrary, many specialists believe that these considerations will not hinder the long-term economic cooperation and insist that it is in both countries’ best interests to pursue a policy of collaboration, mutual economic growth. “We are looking at joint investments, joint ventures, investments by China into infrastructure and how do we actually make the trade basket much more comprehensive than it is now,” said Alka Acharya, professor of Chinese studies at Jawaharlal Nehru University. “This has clearly come onto the priority”. (source: – 30/11/2012)


Acerca de ignaciocovelo
Consultor Internacional


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