A statement issued after the Chinese and Indian Prime Ministers met in New Delhi said the two countries plan to establish a strategic partnership for peace and prosperity. Working together, New Delhi and Beijing can lift a large number of people out of poverty.
Their relationship has now acquired a global and strategic character, especially as they are also
seen as the leaders of the developing countries. Little wonder that the world is watching closely as the leaders of the two nations meet with bear-hug and bonhomie, says G. Srinivasan.
THE bear-hug and bonhomie that marked the meeting between the Premiers of the world's two biggest developing countries were reminiscent of the Hindi-Chini bhai-bhai halcyon days when bilateral relations between the young independent countries of Asia began blossoming.
Though developments after the mid-1960s were none-too-positive, both the countries ambled on without souring relations any further.
Ever since Deng Xiaoping adopted economic reforms by marrying Marxist ideals with market forces in the late 1970s, China has come a long way. Bybecoming a member of the World Trade Organisation (WTO), towards the end of 2001, it has engaged with the rest of the world by adhering to the rule-based global trading system.
Though India embraced economic reforms only in the early 1990s following a brush with bankruptcy on the balance of payments front, it has always enjoyed a vibrant private sector. India was a founder member of the WTO precursor, the General Agreement on Trade and Tariffs (GATT), set up in the post-War era.
While the Chinese Premier, Mr Wen Jiabao, is a recent phenomenon in the pantheon of the Chinese Party hierarchy, Dr Manmohan Singh is seen as the original reform architect of India and his elevation to the Prime Ministership was widely seen as heralding India's continuity with economic reforms.
Be that as it may, when the two Premiers met in New Delhi and shared a natural warmth, characteristic of the historic ties between the two countries, the world turned to look at the coming together of the two Asian giants, with diametrically different political ideologies and "certain differences in the pattern of development," as diplomatically described by the Foreign Secretary, Mr Shyam Saran. This was rightly captured by the joint statement issued at the end of the two leaders meeting which said that as India-China relations have now acquired a global and strategic character, the leaders of the two countries have agreed to establish an "India-China Strategic and Cooperative Partnership for Peace and Prosperity".
Lest any such strategic alliance forged between the world's two most populous nations should upset the global superpower, both the leaders have said that their cooperation is for peace and prosperity and implied in this admission is that neither is against this or that issue or against any particular power.
This indeed sounds heartening as, working together, New Delhi and Beijing can lift a large number of people out of the poverty they are trapped in. This cooperation is especially useful as the two, with Brazil, are the leaders of the G-20 alliance that is taking up the cause of the developing nations at the WTO.
For instance, they are fighting for the elimination of the huge farm subsidies being doled out by the developed countries, in general, and the European Union, in particular.
At the WTO, India and China have been "working together to preserve stability and growth in the global economy and reduce disparities between developed and developing countries" as the joint statement put it. At the New Delhi meeting of the G-20 in March, the Chinese Ambassador to the WTO, Mr Sun Zhenyu, had told this correspondent: "China and India share many common features. We are very strong partners in the WTO in the field of defending the interest of the developing countries, particularly in agriculture and other issues... "
Comparisons have always been drawn between India and China on their ability to attract foreign direct investment (FDI) and the discomfiture of India, which attracted less than $ 5 billion in 2004 against a whopping $ 53.5 billion by China.
To this conundrum, Mr Zhenyu remarked that China has continued the opening policy and unified trade policy in compliance with WTO obligations and become transparent so that it created a good environment for attracting foreign investors.
He said that over the last couple of years, both imports and exports of China had zoomed and "we solved foreign investor problems and we are sensitive to their request". Moreover, what turns the foreign investors towards China is that 70% of them reinvest their profits and this is "a major cause of FDI" boom in China.
One can only deplore that in India the FDI policy regime is riddled with sectoral caps and entry and exit barriers even after a decade and half of economic reforms.
India is a functioning democracy with a well-laid judicial system in place and English speaking and qualified professionals abound. Yet, because of lack of a stable and coherent policy regime, India is paying a heavy price and this is compounded by the political compulsions of coalition governance.
The Left parties supporting from outside the Government are the first to cry foul over the opening up of any sector even as the citadel of Left ideology - China - is deftly riding the twin horses of market and Marxist principles.
Is it not time that India learnt a few lessons from China and gained mastery over the art of managing contradictions without being assailed by the weight of conscience?
This was pithily pointed out by no less a pragmatic leader than the original reformer Deng when he said that it does not matter whether the cat is black or white as long as it catches mice.
Pursuit of wealth is important if the primary objective is to reduce poverty and promote prosperity.
But till China integrates itself into the global trading system - it has a transition period till 2010 to continue with its own policies - India should be cautious in aligning itself with a neighbour whose economic system disregards the environment, bans autonomous labour unions, has scant regard for personal property rights, uses the banking system to subsidise the public sector, and does not adhere to the intellectual property rights regime.
In spite of the transition period available to China till 2010 to become fully compliant with the provisions of the rule-based system exemplified by the WTO, China has concocted its own brand of development that drew liberally from the 19th century laissez-faire (free trade in the true sense) milieu coupled with 21st century infrastructure to ensure that it remains the darling of foreign investors who keep pouring resources into the Middle Kingdom.
Again, as both countries have enormous appetite for energy to maintain the tempo of their rapid development, their cooperation for cheap power in taking up equity stake in third country oil acreage for exploration and production-sharing has turned into competition where Indian national oil companies lost out to Chinese counterparts in a couple of places recently.
As each country according to its capacity to survive is the credo in the WTO-dominated world economic scene, cooperation between India and China should be towards peace and prosperity not only for themselves, as emphatically put by both the Premiers, but also to the rest of the world which should not be seen to be miffed by the tango of the elephant and the dragon.Business Line
