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Opinion / Op-Ed Contributors

Countries look to boost development

By Amitendu Palit (China Daily) Updated: 2011-10-12 08:02

The timing of the first China-India Strategic Economic Dialogue held in Beijing on Sept 26 and 27 was significant for several reasons. The first was the adverse economic outlook for Europe. With the international community working hard to solve Europe's debt crisis, there was speculation over whether China and India, the two largest emerging markets, would examine how the crisis affected their prospects. The speculation became stronger as the dialogue took place soon after the BRICS countries met and proposed buying euro bonds for mitigating Europe's debt problems.

In the end, however, the dialogue focused purely on bilateral economic issues. The two sides discussed a variety of subjects including energy, environment, water management and railways. All of these are important development priorities for both sides and it is heartening that they decided to focus on specific issues for sharing mutual experiences and considering possible future cooperation.

Energy efficiency was expected to feature, given the increasing demand in both countries and the lack of adequate energy reserves for meeting these demands. There are two aspects to the discussion on energy: The first is improving energy efficiency and the second is making energy consumption less carbon-intensive. In both areas, China and India have much to learn from each other. World history points to a strong positive correlation between economic growth and energy in the development trajectories of countries until they develop appropriate technologies for conservation and optimum use of energy. Similarly, a greater use of energy is expected to increase carbon emissions unless cleaner fuels are used. Both countries are now in the process of experimenting with technologies and using less carbon-intensive fuels, and would have had much to share in this regard.

Another important subject discussed was water management. Availability of water for residential, agricultural and industrial purposes is becoming a serious concern for both countries given the per capita decline in water availability. China and India are also becoming increasingly worried about quality. It is clear that the two countries need to think of innovative systems of water management. This is likely to include difficult decisions such as pricing water and rationing its use. Again, these are areas where both countries can learn from each other.

Railway infrastructure was also discussed. Like China, railways are vital to India for increasing connectivity between hinterlands and coastal areas. Such connectivity can considerably reduce transportation costs and help industries become more cost-efficient. At the same time, it can also help in facilitating movement of people from rural to urban areas. In this respect, India's interests would be in learning from China about the successful introduction of bullet trains and the building of extensive high-speed corridors to reduce travel times.

Among other bilateral issues, the dialogue also focused on core concerns pertaining to specific interests of both sides. For India, these were obtaining greater access in the Chinese domestic market for its pharmaceutical and IT products. For China, specific interests involved dealing with the problems faced in supplying telecommunication equipment to India.

The successful hosting of the dialogue (the next one will be in India next year) underlined the efforts of both countries to pursue economic engagement as the most constructive way of promoting cooperation and improving the overall bilateral relationship. The importance being attached by China to India as an economy is evident from the fact that India is the only country other than the United States with whom it has a strategic economic dialogue. For India, on the other hand, China is not only one of the largest economic partners but also a country with whom the prospects of deeper and broader economic ties are highly encouraging.

At a time when the world economy is likely to face a deceleration in growth due to sluggish economic activity in the US and Europe, China and India, despite lower growth forecasts, are projected to remain the fastest-growing major economies for 2011 and 2012. The bilateral strategic economic dialogue becomes all the more important because both are attractive markets and investment destinations for each other. Clearly both countries consider each other as high-priority economic partners and are working toward enlarging that bilateral economic relationship.

The author is head of development and programs and a visiting senior research fellow at the Institute of South Asian Studies, National University of Singapore.

(China Daily 10/12/2011 page9)

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