Union Commerce Minister Suresh Prabhu and his Chinese counterpart, Zhong Shan, met in New Delhi on Monday for the first high-level contact between both sides, which have decided to “reset” their ties this year in the run-up to a Xi-Modi summit meeting in China.
In exclusive written replies to The Hindu , Mr. Zhong, who co-chaired the 11th meeting of the India-China Joint Group on Economic Relations, Trade, Science and Technology with Mr. Prabhu, said a free trade agreement (FTA) between India and China would be negotiated in due course, which would be a breakthrough in ties.
On economic ties
Since 2014, President Xi Jinping and Prime Minister Narendra Modi have met on several occasions. Mr. Zhong said they had decided that the two countries would build a closer partnership in development and deepen cooperation in all areas. With the care and personal support of the Chinese and Indian leaders, the trade and economic ties between the two countries had kept a fast-growing momentum.
In 2017, the bilateral trade reached $84.4 billion, registering a growth of 20.3% from the year before and a record high. In particular, China’s import from India soared by 40%, helping ease the bilateral trade imbalance. China remained India’s largest trading partner. India had become one of the most important overseas investment destinations of Chinese companies.
Talks with Prabhu
Mr. Zhong said that at the 11th session JEG meeting, he and Mr. Prabhu had in-depth discussions and the two sides had reached a series of important consensus. First, the two sides would jointly promote 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. Second, the two sides would promote India’s exports to China so as to address the trade imbalance between the two countries.
China welcomed the participation of Indian businesses in the agricultural, pharmaceutical and IT sectors, and the participation of producers of manufactured goods. China would provide Indian participants with preferential arrangements. Third, the two sides agreed to set up a special working group to draw a road map for developing two-way trade ... The two sides supported the multilateral trading system and safeguard the interests of developing members. Both sides would demonstrate flexibility to reach at an early date a modern, comprehensive and mutually beneficial RCEP agreement of high standards.
The two sides are also considering positively launching in due course negotiations on a regional trade arrangement or free trade agreement between China and India.
Here is the full text of the interview:
Where are India-China trade ties headed after the meeting between you and Mr. Prabhu?
The Chinese people often say that a distant relative is not as good as a near neighbor. China and India are important neighbors to each other. They are both large developing countries and major emerging markets. Since 2014, President Xi Jinping and Prime Minister Modi have met on many occasions. They have decided that the two countries will build closer partnership in development and deepen cooperation in all areas. With the care and personal support of the Chinese and Indian leaders, the trade and economic ties between the two countries have kept a fast-growing momentum. In 2017, the bilateral trade reached 84.4 billion US dollars, registering a growth of 20.3% from the year before and a record high. In particular, China’s import from India soared by 40%, helping to ease the bilateral trade imbalance. China remains India’s largest trading partner. By the end of 2017, China made a cumulative investment of over 8 billion US dollars in India and made considerable progress in infrastructure cooperation. An increasing number of Chinese companies have responded to “Make in India”, “Digital India” and other strategic initiatives proposed by India and actively expanded cooperation in the Indian market. India has become one of the most important overseas investment destinations for Chinese companies.
I would like to stress that development is the top priority for both China and India. China-India commercial cooperation happens in the right place at the right time with the right people. With the care and support of the Chinese and Indian leaders, the geographical advantages as neighbors and the huge markets of over 2.6 billion people of both countries, China and India have vast room for cooperation in trade, investment, infrastructure, IT, the Internet, culture, tourism, medical and healthcare. China and India account for 35% of the world’s population and 20 % of the global GDP, while their bilateral trade only accounts for 0.5% of the global total, leaving huge room for development. The day before I arrived in New Delhi, the Ministry of Commerce of China and the Ministry of Commerce and Industry of India jointly hosted in New Delhi a special promotion for the China International Import Expo (CIIE) and a signing ceremony for trade deals between China and India. With unprecedented enthusiasm for cooperation, businesses of both countries signed 101 trade deals with a contractual value of 2.368 billion US dollars. Undoubtedly, this has given us high expectations for and strong confidence in a dance of the Dragon and the Elephant on the trade and economic front.
What were the main outcomes of the meeting?
At the 11th session JEG meeting, Minister Prabhu and I had in-depth discussions and the two sides have reached a series of important consensus. First, the two sides will jointly promote 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. Second, the two sides will promote India’s export to China through the CIIE so as to address the trade imbalance between the two countries. China welcomes the participation of Indian businesses in the agricultural, pharmaceutical and IT sectors, as well as the participation of producers of manufactured goods. China will provide Indian participants with preferential arrangements. Third, the two sides agree to set up a special working group to draw a roadmap for developing two-way trade, promoting the sound and balanced development of our trade and expanding investment cooperation so that we can promote high-quality development of trade and investment cooperation in a coordinated manner. The two sides will strengthen multilateral and regional economic cooperation. The two sides support the multilateral trading system and safeguard the interests of developing members. Both sides will demonstrate flexibility to reach at an early date a modern, comprehensive and mutually-beneficial RCEP agreement of high standards. The two sides are also considering positively launching in due course negotiations on a regional trade arrangement or free trade agreement between China and India, so as to elevate the bilateral trade and economic cooperation to a higher level. Fourth, the two sides will actively promote exchanges and cooperation on tourism, culture and human resources to strengthen people-to-people bonds. Besides, we also had sufficient discussions on issues such as properly resolving trade frictions, continuously improving the investment climate and actively addressing the difficulties confronting businesses in their investment and operation, and reached important consensus on these matters.
The massive trade deficit of about $50 Billion remains the most important issue to address, says the Indian government. How would you address this?
I do appreciate what Mahatma Gandhi once said: “I do not want my house to be walled in on all sides and my windows to be stuffed. I want the culture of all lands to be blown about my house as freely as possible.” Just as President Xi Jinping emphasized at the 19th CPC National Congress, China will not close its door to the world, and we will only become more and more open. We very much welcome the investors from India and around the world to China, a shining destination for investment from all lands.
In particular, I would like to draw your attention to the China International Import Expo, one of the latest moves in China’s reform and opening-up. In May 2015, Chinese President Xi Jinping announced on the Belt and Road Forum for International Cooperation that China would hold the China International Import Expo starting from 2018. The first Expo will be held on November 5-10, 2018 in Shanghai. So far, among China’s 230 trading partners, more than 180 of them will participate. More than 1,500 companies, including nearly 100 Fortune Global 500 companies and flagship companies in their respective industries, have confirmed or explicitly said they would participate. At the same time, more than 150,000 professional buyers from China will come to the CIIE. The Indian government has made clear that it would actively organize Indian businesses to participate in the expo.
As the world’s first import-themed national-level expo, the CIIE is a great creation in world trade history. With globalization hitting setbacks, the multilateral trading system challenged and protectionism rising, the voluntary proposal to host an import expo against such a background is a testament to China’s genuine will to open up its huge market of 1.3 billion people and a concrete move on China’s part in support of globalization and trade liberalization. Although initiated by China, the CIIE is a chorus of the world an international expo that has drawn multiple international organizations and countries across the world, rather than China’s solo. We’ll work to make the expo a public platform for international trading and a premier forum for global business. We’ll offer preferential treatment and facilitation to participating companies from India and the rest of the world to ensure a successful event.
Your visit to India comes days after the U.S. announced a succession of trade sanctions. What’s your response and what will such bilateral measures mean for the multilateral trading order?
The 19th CPC National Congress report notes that China supports the multilateral trading system, promotes FTAs and pushes for an open world economy. China will stay an active participant, builder and contributor of the multilateral trading system.
The Section 232 and Section 301 investigations instituted by the U.S. recently are acts of unilateral protectionism. The related trade restrictive measures will not only disrupt normal international trade order, but also severely undermine the multilateral trading system. In a world community of shared and intertwined fortunes, trade war hurts others as well as oneself and has no winners, bringing nothing but a serious negative impact on the world economy.
It is in the interest of both China and India to uphold the authority and efficacy of the multilateral trading system. As key members of the WTO, the two have maintained close cooperation under its framework. At this meeting, we both agreed that in the face of spreading de-globalization movement and rising protectionism, China and India will step up communication and position coordination, and continue to send positive signals to the outside world in support of the multilateral trading system and jointly defend the interests of developing members.
The 11th China-India Joint Economic Group Meeting is a complete success, yielding a host of major commercial outcomes. What’s been achieved by China and India working together as the world’s biggest developing country and most populous country is also attainable for others. Facts have proven that for either multilateral or bilateral cooperation, trade war is not an option and that only cooperation is the right choice.