As many as 48 memoranda of understanding (MoUs) amounting to $16 billion were signed between Indian and Chinese companies as Chinese Premier Wen Jiabao arrived in India today.
Most of the MoUs were for import of raw material by China from India, a fact that told its own story. In his speech to Indian chambers of commerce organised by the Confederation of Indian Industry, Wen repeatedly emphasised that the relationship was one of cooperation not competition or “rivalry”.
He spelt out what he meant. India should move faster on a Free Trade Agreement (FTA), now that the report of the Joint Working Groups had come in; the two countries should extend cooperation to the banking, tourism, oil and gas conservation, education and health sectors and India and China should form a CEOs’ forum.
He offered India market access in the pharma, textiles and manufactured goods sector. Adding that as a result of close cooperation, the world would hear better the voice of developing countries.
"China and India are partners for cooperation and not rivals in competition. There is enough space in the world for the development of both China and India and there are enough areas for us to cooperate," Wen said.
Indian commerce minister Anand Sharma made his point, too. Quoting from Rabindranath Tagore’s poetry, Sharma said India was looking at China’s government procurement programmes, especially in the health sector. He emphasised that India would welcome investment in infrastructure and manufacturing and said India’s software industry had provided help to many countries in the world and was keen to offer its services to China as well.
Wen said India’s software industry – Infosys, Satyam and TCS – had opened an R&D centre in China, not just boosting the Chinese economy but also earning handsome returns. Pharma had set up business in China to mutual advantage. Rapid industrialisation had potential for the markets in both countries. Because the nature of industrialisation was different – India specialised in services and China had strengths in infrastructure and manufacturing – opening each other’s markets could be economic multipliers for both.
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‘Between us’
Wen pointedly said trade friction between the two countries should be handled bilaterally. No other country has initiated more anti-dumping complaints with the World Trade Organization against China than India.
He also said there was need to increase Foreign Direct Investment and the governments should review capital flows between Beijing and New Delhi. He suggested greater trade cooperation abroad, implying joint projects in third countries.
Wen argued strongly for more interaction, in general, between China and India – of business delegations, tourists, more direct flights and more cultural and educational meetings.
Indian businessmen, while generally appreciative of the Chinese reponse said the government needed to move faster. They said that India had to issue a demarche to China in 2007, seeking faster market access for fruits, vegetables and basmati rice, owing to India’s high comparative advantage in the agricultural sector.
India’s exports to China dipped by 14 per cent in 2008-09, whereas imports increased by 20 per cent when compared to 2007-08. Three-fifths of India’s exports to China consist of ores, minerals, primary and semi-finished iron and steel. China, on the other hand, exports products such as electrical machinery, equipment, electronics and organic chemicals. China’s structure of exports is moving towards high-end, value added products, whereas the pattern of India’s exports has generally remained unchanged.
Among the MoUs signed today, there are some between Chinese companies and the bigger Indian companies – Reliance and Adani for power, Reliance and Essar in banking – and many for the import of raw material like guar seed, rapeseed meal, iron ore, menthol, frozen fish, zinc concentrate, castor and seafood.