Q1. China has emerged as India’s largest trading replacing US in March 2008. During the economic liberalisation in 1991, the level of bilateral trade between the two countries was not significant, as the trade basket was restricted to a limited number of products. But, within a short time span, China became the India’s single most important trading partner. How would like to define the journey so far? What were the triggers for growth?
A2: The increase in trade is due primarily, if not wholly to a massive increase in Chinese exports to India, which are now 5 times its Imports from India. Consequently, India has a huge trade deficit with India.
Q2. There is huge amount of complexity in the relationship between India and China. And there is an undercurrent of suspicion as well. How have those factors spilled over to the bilateral trade? What kind of manifestations of that spill-over effect have we seen so far?
A2: China is a non-market economy and given its communist party controlled government and economic system, it can employ subtle forms of Non Tariff barriers, by just telling companies not to import certain products or from certain countries. Thus if doesn't even allow us to export pharmaceuticles & other items where we have demonstrated comparative advantage. It also engages in dumping manufactured goods at the cost which is less than the sum of parts used in it.
Q3. You were the Chief Economic Adviser to The Government of India, Ministry of Commerce during 2007-2009. What was your strategic outlook to handle India-China relationship during that time? What are the observations and insights you derived during that stint?
A3: In Indian system, Trade policy is under the purview of the commerce ministry. As general policy we didn't discriminate against any country wit respect to tariffs or regulatory standard. We also supported MOC in removing Non tariff barriers directed at us.
Q4. What kind of impact China’s ambitious plans like Strings of Pearls, China-Pakistan Economic Corridor and One Belt One Road (OBOR) on the India-China bilateral trade?
A5: They have no direct effect on bilateral trade. The ports built by China are largely redundant and consequently unprofitable & with very low capacity utilization. With the exception of Pakistan, the road & rail infrastructure built under OBOR are open for India & other countries to use. Pakistan doesn't allow India to use its infrastructure for transit & trade with Afghanistan or Central Asia & consequently has zero impact on bilateral trade.
Q5. How important is the normal India-China bi-lateral relation to various bodies like BRICS, RCEP, ASEAN etc.? What kind of impact will India-China relationship have on those platforms, going forward?
A5: Multilateral organizations stand on their own and depend on their own mutually accepted rules. The huge trade imbalance that China has with India is probably delaying the conclusion of an RCEP agreements. If China acknowledges this imbalance and accepts its consequence in RCEP, the RCEP could conclude much faster
Q6. China is trying to assert itself in the South-East Asia more aggressively. How will that factor reshape the India-China bilateral trade?
A6: Aggressiveness always induces caution, and this is will have similar effects
Q7. India mainly exports raw materials to China such as cotton, ores, organic chemicals and copper. However, as the experts say that the Chinese economy rebalances to become more consumer led, there will be a further fall in exports. What’s your thought on it? How should India tackle this situation? Is there a need to re-strategize and explore new export possibilities in the Chinese market?
A7: China's trade with developing countries follows the Prebisch-Singer hypothesis of trade between the Center and the periphery: China imports natural resources from EMDCs and exports manufactured goods to them. This is an essential element of its economic development strategy. The only way this pattern to change is for China to shift its labor-intensive manufacturing to India (FDI) as it's becoming uncompetitive in China. We welcome this move Eg to exclusive Chinese ETZ/FTZ in India.
Q8. Various sectors in India like pharmaceutical, electronics and machinery are dependent is Chinese imports. How Can India reduce dependence on Chinese imports?
A8: The "Make in India" & "Ease of Doing Business" must be used to promote these sectors especially by attracting FDI currently operating in these sectors in China and even Chinese firms that are willing to abide by rules applicable to other FDI.
Q9. The trade deficit is a cause of concern for India, which stands at $ 51.09 billion in FY2017. What can India do to reduce the trade deficit?
A9: Follow a policy of reciprocity & symmetry with respect non-tariff barriers, though we are at an inherent dis advantage in our transparent democratic system and their non-transparent one.
Q10. What can India do to make the trade relationship with China more equal? Is the strategy to market India as an investment destination an answer?
A10: Yes we welcome Chinese investment in manufacturing and infrastructure, subject to cyber security consideration.
Q11. As per the news reports, a trade war seems to be looming between India and China after New Delhi imposed anti-dumping duties on 93 Chinese products amidst a military standoff in Doklam area. An article in The Global Times, part of the ruling Communist Party's publication group, urged Chinese firms to "reconsider the risks" of investing in India and warned New Delhi to be "prepared for the possible consequences for its ill-considered action." How do you read the situation at the moment?
A11: This is false News by hyper-nationalist elements in China. These 93 anti-dumping duties have been imposed over a decade since the Global Financial crises in 2008, without any hint of a trade war.
Q12. Analysts are of the view that the growth in economic ties with China will come through small entrepreneurs. However, how will the MSME sector withstand various restrictive measures and work towards the growth? Don’t you think MSME sector will bear brunt of all these developments?
A12: The issue with China is the asymmetric benefits derived by a non-market economy and the imbalance in trade. Economic ties can can progress if and only if China is agreeable to removing non-transparent barriers on India's exports. MSMEs would be the primary beneficiaries of this.
Q13. What role can the BRICS summit to be held in China play to diffuse the tension between the countries?
A13: Summits provide an opportunity for leaders to come to informal understanding. Some progress in reducing tensions is likely
Q14. What are the possibilities and opportunities both the countries can explore for economic and trade cooperation, going forward?
A14: As indicated RCEP is one forum in which progress could be made. Another is Chinese FDI in Indian manufacturing.
Q15. What should both the governments do to make sure trade shouldn’t get affected because of various developments?
A15: Remove the lacuna in the border management agreements that have ensured that scuffles on LAC don't turn into fatal incidents, and turning LAC into a better defined LOC.
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