India and China- the elephant and the dragon of the emerging 21stcentury economic superpowers- way ahead…(Published in ISSN journal from Tezpur College,Deptt.of History)

India and China- the elephant and the dragon of the emerging 21^st century economic superpowers- way ahead…….

Indo-China economic relations gaining boost to a huge extent since 2004 rather seems to be a flabbergasted instance since the 1962 war that caused a serious blow to the trade, economic as well as the diplomatic relations between the two Asian giants. The 21^st century is essentially the millennium of the Asian hegemony and this (rhetoric of virtual hypnosis) foresight of the worldview if proven true in the real sense shall be truly a sea change for the both neighboring countries one being the mighty elephant (India) and the other being the unstoppable dragon (China). This inhibits for the mixed co-operation, in all the segments of the development on the nation building process for both the emerging Asian superpowers. Now can there be an unconditional friendship between the elephant and the dragon which seems in the real sense is quite difficult and challenging to make it happen true? This is the big question of the hour. Here in this short article, apart from the other indices of nation building process between both the nations, I shall discuss on the economic aspects of co-operation between both the countries and the way forward for the both nations to emerge as the 21^st century asian economic giants. 

 

A brief history of Indo-China economic relations:

         The Indo-China relations have been often viewed from political lenses owing to the kind of history that both the nations share and the geo-political position in the changing world order. The India-China relations rejuvenated from 1980 when both the countries open their economies. Consequently in the year 1984, both the nations signed the Most Favored Nation (MFN) Agreement to boost economic integration.

Bilateral trade between both the countries started escalating from 1990 onwards more rapidly. However, only in 1994 both the nations signed agreements on avoidance of double taxation along with simplification of visa application procedures and co-operations as well as the banking sectors reforms. On this revolutionary tenure of Indo-China relations along with the globalization effect served as a catalyst in for the economic interdependence between both the countries. All these led to a rise in the bilateral trade from an insignificant $260 million in 1991 to a bulky $1.1 billion by 2003. This is indeed a praiseworthy and major change in the economic doldrums between the two nations. The bilateral trade kept on soaring until it reached a whopping $51.8 million in 2008 which made China, India’s largest trading partner. Therefore in order to address the issue of bilateral economic co-operation between India and China for the first time an India-China Joint Study Group(JSG)was established  in 2000. The bilateral trade kept on rising until it reached the level of $73.9 billion started declining from 2012 onwards. It is worth mentioning here that in 2006 under the then UPA led Dr. Manmohan Singh Govt., the Chamber of Chinese Enterprises in India (CCEI) was formed for the advancement of both business-political discussions between the two nations and to promote Chinese companies in India.

Current Trends of Indo-China relations(Modi regime):

 Despite of the ups and downs and perplexed complexity of Indo-China relations the economic ties where feuds are less likely to arise. If the relationship has to be deciphered under the shades of the good, the bad and the ugly; economic relations have to be close to ‘the good’ shade. With the establishment of the Narendra Modi led Govt. at the centre, the Indo-chinese relations have taken up a new contour to start with. The economic aspects of the bilateral ties have become more apparent  and tending towards a positive an strong bond. The recent visit of Narendra Modi to China and the Modi-Xi summit meeting was largely over business and economic development. As of present, the bilateral trade between India and China has risen enormously accounting for nearly $65 billion at present and is expected to rise even further. But the constraint here lies is the trade imbalance factor which stands at a staggering $ 30 billion. This negative trade balance can be checked through excess and huge quantity of Chinese investments into the IT and pharmaceutical sector of India. India has even offered China the investment route to building of industrial parks, railway infrastructure etc. It is enough to justify now that the current Indi-China relations has transformed from the orthodox ‘buyer-seller’ equation towards an investment oriented one. 

      The meeting between Narendra Modi and Xi Jingping last year is viewed as a grand leap forward in reaffirming the economic relations between India and China. It is definitely the need of the hour to play a geo-political smart economics with the stature of a fusion of ‘Modinomics’ with ‘Xinomics’ towards a grand multi aligned strategy in the Asian economic drama. As economy speaks louder today like military might in the cold war era, it is in India’s interest to have excellent economic ties with different countries keeping China in mind too. The proximity between New Delhi and Beijing can be even made closer through smart economic and trade ties which shall renew its overall relations with China. It is seen that Modi’s participation in the BRICS summit in July 2014 and Xi Jingping’s invitation of India’s participation in the Asia-pacific Economic Cooperation(APEC) meeting for the first time in history are naturally gestures for reawakening the slow-paced economic ties between both the countries. Also Nirmala Sitharaman, India’s commerce minister has visited Beijing twice and inked agreements for setting up of industrial parks in India. Moreover, China has announced the ‘Maritime Silk Route’ and ‘Silk Road’ initiatives also known as ‘ Belt and Road’. The ‘Belt and Road’ initiatives by China aims at achieving development and prosperity for the various countries along the ‘Silk Road economic Belt’ and the 21^st century Maritime Silk Road’ by linking the past with the present, landmass with seas and development strategies of various countries. This step will forge four billion people from more than 60 countries in Asia.

   The economic road map was laid down in the ‘Five Year trade and economic development plan’  devised for a more effective economic engagement , balance of trade and sustainable development between the two states last year. The most significant aspect of the Indo-China trade relations came to a major change with the Chinese Premier Xi Jinping’s three day visit to to India. The signing of the five year trade agreement to sort out the biggest impediment in Indo-Chinese trade ties. Also in the pact it states to lay down ways to achieve a more investor friendly and trade oriented surrounding to strengthen the economic bonding between both the countries’ financial sectors. Memorandums of Understandings (MOUs)were signed for setting up of industrial parks in Gujarat and Maharashtra, apart from investments in railways, bullet trains and power generation were noteworthy in the agreement.

Conclusion:

India’s foreign policy is undergoing perceptible shift under Modi govt. would not be called as an embellishment. Indo-China relationship today is likely to see more positive interactions with pragmatism prevailing on both sides. Economic growth, which has been Modi’s main election agenda should underpin his foreign policy as well. Growth of India’s booming economy will in no way be possible by antagonizing the world’s second largest economy that is being projected to move further by the end of the year to replace the United States at the top. Hence it becomes imperative for Modi to seek a smooth relationship with China. India accepts that China will soon emerge as the world’s largest economy. China on the other hand, accepts that it can do little t prevent India from being the world’s third largest economy in 10-15 years. Thus, each side should look at the other as one of the biggest and fastest growing markets and investment destinations for its companies. These emerging economic imperatives would supposedly lead to an amicable settlement of the long standing border disputes between the two countries and also other geo-political rivalry thereby aiding India’s rise as a global player and for the Asian jockeying for influence as the emerging superpowers of the 21^st century.

References:

1.     Articles of World Focus June Issue 2015 by Sukanya Kakoty and Ms.Dona Ganguly.

2.    Mainstream magazine.

3.     Different write ups from magazines and journals.

4.     Internet facts.

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