CHENNAI: Taking forward the Wuhan spirit in which India and China decided to “prudently manage” their differences and setting the stage for the removal of a major irritant, President Xi Jinping and Prime Minister Narendra Modi agreed to set up a “new, elevated mechanism” to reduce the massive trade deficit between the two countries.
Briefing the media after the second informal summit in Mamallapuram, which Modi described as the “Chennai connect,” Indian Foreign Secretary Vijay Gokhale said on Saturday the Chinese agreed to take “sincere action and discuss in a very concrete way how to reduce the trade deficit.”
Gokhale said the new mechanism would include Chinese Vice-Premier Hu Chunhua and Indian Finance Minister Nirmala Sitharaman, declaring that China “welcomed Indian investment in I-T and pharmaceutical” sectors.
India’s trade deficit with China, which currently stands at an estimated $53 billion, accounts for nearly one-third of the country’s global trade deficit.
The huge trade gap is the reason why India has concerns over its entry into the 16-nation Regional Comprehensive Economic Partnership, a proposed free trade agreement between the 10-nation Asean and its six FTA partners. “The Prime Minister specifically said India looks forward to this but wants RCEP to be balanced in goods, services and investment. President XI said Indian concerns will be taken into account,” Gokhale said.
Laying emphasis on people-to-people connect, the two leaders, who spent six hours of one-on-one “quality time,” decided that the public of both the countries must be brought into the relationship. “It was decided to designate 2020 as the year of India-China cultural and people-to-people exchanges,” he said, adding that Modi suggested homestays for tourists.
Analysts welcomed the Chinese interest in India’s I-T and pharma sectors. “India should look to tap China’s manufacturing sector while the Chinese should look for more investments from India in the I-T, pharma and tourism sectors,” said Debasish Chaudhuri of the Institute of Chinese Studies in New Delhi.
A researcher at the Indian Council of World Affairs said the best way to enter the Chinese I-T sector was for India to convince Beijing to allow US companies Facebook, Whatsapp, Twitter and Google to operate in China. Indian I-T companies could then look to provide back end support, contributing to enhancing Indian trade with China.
Former Ambassador Kishan Rana said the fact that Kashmir, over which India and China have differences, did not figure in the talks revealed that both the countries can enhance bilateral relations while having opposing views. Rana said the two sides could take a leaf out of China and Japan, who have shared a bitter relationship in the past but have set aside their differences. “Given the major issues that China and Japan have had in the past and how they have reconciled, India and China can take a step in the right direction.”
He said Modi and Xi have kept “contentious issues like Pakistan, Kashmir and border disputes on the backburner and have taken their ties forward by virtue of the summits.” Perhaps this is what Gokhale referred to when he said India and China had agreed to follow “independent and autonomous foreign policies on international and regional issues.”