India & China Favour Joint Economic Strategy
Displaying enhanced trust, India and China on Monday formulated an economic strategy for increasing trade and ensuring development and economic growth amid global economic slowdown.
The planning commissions of the two Asian majors signed as many as 11 MoUs worth $5 billion ( ₹ 27,865 crore ) allowing market access to financial institutions in either country to boost investment and expand commercial operations.
The Second India – China Strategic Economic Dialogue between the Planning Commission of India and the National Development and Reform Commission of China successfully deliberated on a host of issues for “greater cooperation at the global level, strengthening communication on macroeconomic policies, deepening and expanding trade and investment and promoting bilateral cooperation in the financial and infrastructure sectors.”
Deputy Chairman of Planning Commission Montek Singh Ahluwalia and his Chinese counterpart Zhang Ping discussed the outcomes of the working groups on policy coordination, infrastructure, energy, environment protection and high-technology set up at the first dialogue held in Beijing in September 2011.
The two sides decided to increase their cooperation to cope with the global situation and pursue common interests in international monetary and financial systems; stabilise the volatility in global commodity markets; work towards sustainable development and climate change goals; and ensure food and energy security.
Impetus to growth
Concerned over the declining global growth trends and demand, the two countries decided to jointly strive to maintain continued economic growth through a slew of agreed measures.
For expanding trade and investment, the thrust would be on an open trade regime by removing market barriers, enhancing business exchanges and improving transportation links, Mr. Ahluwalia told reporters. Bilateral trade would be enhanced from $74 billion to $100 billion, Mr. Ahluwalia said, adding that both were working to make it more balanced.
The two countries also agreed for greater financial cooperation by allowing financial institutions to set up operations in either country and expanding commercial operations and support enterprises. They also agreed on conducting joint studies on issues of mutual interest focusing on benefits of best practices and information exchanges and skills development, among other sectors.
11 MoUs signed
Both countries took the first step towards addressing the severe imbalance in their trade by signing 11 MoUs. The agreements envisage investments of over $5 billion ( about ₹ 28,000 crore ).
Most MoUs envisage Chinese investment which policymakers, including Prime Minister Manmohan Singh, feel is the best way to partly offset the balance of trade currently heavily skewed in China’s favour.
One MoU gives India a toehold in the IT sector, which along with pharmaceuticals and services, is the other focus area for increasing its presence in the Chinese economy.
An agreement was signed between the Planning Commission and China’s National Development and Reform Commission ( NDRC ) for undertaking joint studies in economic policy research and development planning.
The NRDC also signed another MoU with the Bureau of Energy Efficiency.
Indian Railways and its Chinese counterpart signed a MoU, marking the beginning of cooperation between the two public sector behemoths. Having started out with route length that was more than that of Chinese Railways, the Indian Railways has fallen behind and today is in urgent need of affordable technology for running high – speed trains and heavy duty freight trains.
IT major NIIT signed an $800 million deal with the Province of Hainan for setting up an IT technology park to add to its operations in China. Another agreement in this sector was signed between NASSCOM and China Software Industry Association ( CSIA ) for enhancing cooperation in IT and ITES sectors.
If most of these agreements indicate the shape of things to come, the remaining MoUs pertain to Chinese investments, mainly in the power sector. These include an MoU between Reliance Power and Guangdone Mingyang Wind Power Industry Group Co for a 2,500 MW renewable energy project with $3 billion project financing from China Development Bank ( CDB ); Lanco Group pact with CDB for the Anpara Phase – II Power projects ( 4X660MW ); and, another Lanco MoU, worth $98 million, with Zhejiang Feida for the Amarkantak Power project.
The last power sector – related MoU deals with Zhongtian S&T manufacturing electric conductors and transmission lines in Andhra Pradesh for $20 million.
The steel sector will also witness Chinese presence, with Uttam Galva Steel giving the engineering, procurement and construction contract for Phase II of a steel plant to China Metallurgical Group Corporation Overseas Ltd.
The last MoU is for multi – city ‘Waste to Energy’ projects on a ‘build operate and transfer’ basis between Ramky Enviro Engineers and Sanfeng Environmental Industries. Initially the project will take off in New Delhi, Mumbai and Hyderabad and Chennai at an investment of $384 million.
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