Conference on India China Financial Cooperation

India China Economic and Cultural Council (ICEC Council) and the Federation of Indian Micro and Small & Medium Enterprises (FISME) hosted the Roundtable Discussion on 'India-China Financial Cooperation' on 13th November 2009 at the India International Centre as part of the concluding session of the 3rd High Level India-China Finance Conference. (The conference this year was held from 10 - 13 November 2009 hosted by India China Economic & Cultural Council (ICEC) in partnership with Indian Banks Association (IBA) in Mumbai and New Delhi).
The Roundtable Session today addressed financial issues facing Small & Medium Enterprises (SME's) in India and China.

Dr. Abid Hussain, Chairman, ICEC; Mr. P. S. Deodhar, President, ICEC; Mr. Mohd. Saqib, Secretary General, ICEC; Mr. Sandip Ghose, Regional Director, Reserve Bank of India; Mr. Anil Bharadwaj, Secretary General, FISME; Mr. Dinesh Rai, Secretary, MSME; Mr. Paul Joseph, Principal Advisor, MCX; Mr. Arun Agarwal, President & Global Head (International Banking), Yes Bank and Mr. Ashwini Mehra Executive Vice President & Head, SBI were some of the prominent faces representing India. A twenty member delegation from China headed by Mr. Ma Delun, Deputy Governor of the People's Bank of China was here on a week-long visit to India for the conference. The Deputy Governor was accompanied by senior officials from other Chinese regulatory bodies and financial institutions, such as Deputy Governor Mr. Ma Delun, Dr. Yi Cheng, Deputy Director General Research Bureau, PBC and Mr. Li Xiangyang the Deputy Counsel General of China in Mumbai.

Dr. Abid Hussain, Chairman, ICEC Council, in his opening remarks noted that, there are striking similarities & experiences in economic growth of India & China. He also added that, both countries need to work together to foster mutual confidence and alley fears.

Mr. Dinesh Rai, Secretary, MSME, highlighted the role of entrepreneurs in pioneering the economic growth of the country. He stressed that the growth of the SME sector was very crucial since it provides a large employment base and were the roadmap for the future. There are several issues that SME's faced which needed to be tackled and he identified them as - labour issues; quality; taxation and exim policy.

Mr. Anil Bhardwaj, Secretary General, FISME, said that China has earned considerable experience in SME stock exchange. Innovative financial strategies have helped China to infuse equity in SMEs. In view of SEBI's recent decision to allow SME stock exchange in India, the need of bilateral cooperation can be easily understood.

Prof. Anwarul Hoda, Ex-Member, Planning Commission, pointed, that in view of the huge infrastructure finance deficit, India & China should consider strategies, to work together. Such cooperation will not only bring the investment but also the technology which China has used while developing its infrastructure.

Mr. Mohd. Saqib, Secretary General, ICEC Council, expressed that there were hiccups in getting the government to completely take on the responsibility of building roads and improving infrastructure and we had to work on the PPP model. He was very forthcoming and invited China to join hands with India and form an "India-China Infrastructure fund" that would function as a guarantor for both the countries to trade in finance and technology enabling the growth of modern infrastructure in India.

Mr. MA Delun, Deputy Governor of the People's Bank of China, outlined the key areas of bilateral cooperation between India & China. SME Finance, Rural Banking & Infrastructure finance are the areas where the two countries can mutually benefit, he added.
Mr. P.S. Deodhar, President, ICEC Council, in his concluding remarks, highlighted the cultural similarities in India & China and placed high importance of continued dialogue between the two countries.

Chinese delegates expressed their appreciation at the growing trade and socio-cultural ties between India & China and shared that they expected India-China trade to grow to US$60 billion by 2010 (it has already surpassed US$51.8 billion in 2008).

While both countries maintained that the financial crisis last year had a limited impact on their economies because of their prudential banking regulations, distance from the severely affected western markets and the culture of saving; they also agreed that post the financial crisis, regulations that balance innovation and risks needed implementation.

This report was filed by India China Economic and Cultural Council (ISEC Council).

“Capital Freedom of China: Annual Report, 2009”

Chaoliang Jing of Cathay Institute for Public Affairs, Beijing, sent this brief report on the conference that was held on 11 Nov 2009.

Under the moderation of Profs Mao Shoulong and Feng Xingyuan, the conference has been carried out basically in line with the agenda except for some minor and understandable adjustment and it proved a success in the end.

Paticipating in the conference were many important scholars in China (such as Mao Yushi, LJN, Xia Yeliang, Mo Zhihong,etc.) and media persons (including Fang Gang, the vice president of Sohu.com which is a very influential Web portal in China); besides, more than sixty students and graduates from various universities or institutes were also present as audience, and some of them participated as commentators.

The conference is mainly about releasing two great books: one is “Capital Freedom of China: Annual Report, 2009” , co-authored by Feng Xingyuan, Mao Shoulong and Xia Yeliang; and the other is “Financial Logic” by Chen Zhiwu. During the ceremony, addresses were given, questions taken, and commentary provided. Despite any difference among speakers, for most of the participants, they believe in capital freedom rather than capital regulation. In particular, the scholars shed light on the definition, role, and other important aspects around capital. And of course, there were much more sparkles during the activity, whose detailed record would soon come on CIPA website.

Dr Amitendu Palit could not deliver his speech, “On the Financial Freedom and Financial Development in India”. I’m sorry to let you know that he had a very bad cold that day, which stopped him from delivering the speech at all. As a result, the audience, including me, missed the valuable chance of listening to him talk.

From the Berlin Wall to the Great Wall

This week the world commemorated the fall of the Berlin Wall, 20 years ago. That signaled the demise of communism in Europe. 1989 was also the year when China witnessed unprecedented upheaval in Tienanmen Square in the summer, which was forcibly ended on June 4. Not surprisingly, there has been lot of commentaries in the media looking at the events in 1989, and comparing fall of communism in Europe to the longevity of communism in China and its mutation adopting a lot of features of capitalism.

Here are a few interesting items that I would like to share with you. If you come across anything interesting, please do share it on this blog.

Wall Street Journal, Oct 29, 200: In a report from Berlin on the eve of the fall of the Berlin Wall, Mercus Walker asks in the in an article, "After the Wall: A debate over democracy's reach" Does China have a competing autocratic model? The collapse of Communism marked an ideological victory, but some wonder if China now has a competing autocratic model.

In the summer of 1989, American political economist Francis Fukuyama foresaw the "End of History" in a landmark essay, meaning that no credible alternative had survived to political and economic liberty as practiced in the U.S. and Western Europe. All that remained, he argued, was for other countries to catch up.

Today, history is back, according to writers such as Israeli military historian Azar Gat. In his new book, "Victorious and Vulnerable," he says that although democracy is the most benign system in history, it will have to demonstrate its advantages all over again in the face of its latest rival: authoritarian capitalism, as practiced by self-confident powers such as China and Russia.

In retrospect, 1989 led to the near-universal adoption of capitalism, but the same can't be said of democracy. Indeed, by switching from Communist economics to capitalism -- albeit a state-controlled kind that Adam Smith wouldn't recognize -- China and Russia have adopted "a far more efficient brand of authoritarianism" than they had during the Cold War, says Prof. Gat.

Other political scientists say it is too early to tell whether the two powers really represent an alternative path of development to the West.

"It is by no means certain that China can maintain its existing structure of power," says Niall Ferguson, an economic historian who teaches at Harvard Business School. What's more, today's Russia may be growing more assertive, but it's still a far weaker power than the Soviet Union that preceded it, while two of the major emerging economies -- India and Brazil -- are in the democratic camp, Prof. Ferguson points out.

Foreign Policy, Sept 29, 2009: Jeffrey Wasserstrom says that the fall of the Berlin Wall may have been the best thing to have ever happened to the Chinese Communist Party, in the article, "The autocrats' learning curve"

China, unlike the Eastern European states, had early warning that its regime was about to fall; the entire world seemed to know it. That sense of urgency made Chinese leaders avid students of the Soviet Union's downfall. The CCP charged official think tanks with discovering the keys to maintaining a monopoly on power, while avoiding the fate of erstwhile counterparts in Budapest, Bucharest, Prague, and Moscow.

What did the Chinese researchers learn? First, that Europe's 1989 unrest was fueled by patriotism -- a desire to rid their countries of regimes imposed from outside. Protesters in Europe also had a potent mix of economic and political grievances. Those in charge had claimed that Marxist regimes could compete with capitalist ones in material terms, but the night-and-day contrast between the creature comforts available on the two sides of the wall revealed the hollowness of this boast. Finally, Eastern Europe's movements spread quickly because nearly everyone -- regardless of their class -- felt they were in the same boat. The only meaningful social divide was between a small privileged coterie of corrupt officials and the rest. And the rest was pretty much everyone.

The Economist, Nov 5, 2009: The magazine revisits the confusion that prevailed in the echelons of power in China in the aftermath of the events in Europe in 1989. It credits Deng Xiaoping for guiding the party through the most severe challenge it ever faced, by advising the leadership "Keep calm and carry on".

In late 1989 China’s anxiety was so profound and its diplomacy in such confusion that it was difficult to imagine it would ever come to terms with the new world order. Fresh unrest seemed unavoidable. It was far from certain that Jiang Zemin, a little known leader who had been appointed party chief in the wake of the Tiananmen Square unrest, was on firm ground.

China’s dogged insistence that nothing untoward was happening in eastern Eur ope ensured that its awakening would be harsh. In early October 1989, even after thousands of East Germans had fled their country, China sent a senior leader to East Germany’s official celebration of four decades of communism (a “glorious” 40 years, the People’s Daily called it). East Germany’s 77-year-old leader, Erich Honecker, was a conservative much respected by China’s own gerontocrats, and a backer of the crackdown in Tiananmen. His resignation that October was appalling to them.

It was an appeal for cool heads by China’s 85-year-old senior leader, Deng Xiaoping, that helped China’s rulers weather the storm. In September 1989 he told them—in a speech only published years later—to be “calm, calm and again calm” and to carry on with China’s (mostly economic) reforms. Mr Deng’s advice, and its later elaboration, remains China’s guiding philosophy. Its central message is often summarised as taoguang yanghui, meaning “concealing one’s capabilities and biding one’s time”. Mr Deng wanted China to get on with building its economy and avoid ideological battles. The economy, in effect, would save the party.

The China Beat, Nov 9, 2009: This is a blog dedicated to things Chinese. It listed five interesting news items to mark the anniversary of the fall of the Berlin Wall
It quotes a review of David Shambaugh’s China’s Communist Party: Atrophy and Adaptation (University of California Press), in the Huffington Post

accounts of the regime ramping up of security measures to ensure that the 20th anniversary of this alleged non-event was not publicly commemorated in China (score one for paranoia). But there are also stories in June about how dramatically lifestyles in China and the countries place in the global economic order have shifted since 1989. In rapid succession, just before the highly charged June 4th anniversary date, the New York Times ran a piece called “To Shut Off Tiananmen Talk, China Disrupts Sites” (June 2), but just after it, the same paper carried one called “What Would Mao Drive? A Little Red…Hummer”(June 7).

In another item from “Chinese Netizens Leap Great Firewall of China to Mark Berlin Wall’s 20th,” by Aileen McCabe at Montreal Gazette:

They are flying over the Great Firewall of China (GFW) in exuberant numbers to send messages to an anniversary website in Berlin that was set up to allow people to share memories of the night the wall came down, or, recommend “which walls still have to come down to make our world a better place.”

“Ordinary people pushed down the Berlin Wall. Let us follow suit. No guilt falls on a crowd. If we are all anti-GFW, the result will be surprising,” Xiaoxiaoqiu wrote in Chinese at www.berlintwitterwall.com

Yet another mimicked Ronald Reagan’s famous plea to Mikhail Gorbachev and said: “Mr. Hu (Jintao) tear down this wall.”

The censorship slowed down Chinese netizens, but not by much.

Website co-ordinator Carsten Heins said in an interview Friday: “We have about 4,700 tweets, 2,200 are in Chinese.”

Another item on China Beats noted “No Celebrations for the Fall of the Berlin Wall in Beijing,” by Wang Zhicheng for AsiaNews:

As Europe and the world celebrate the fall of Berlin Wall and the end of the Cold War, in mainland China the anniversary has gone unreported. Prominent international public figures are in Berlin today to celebrate the start of a peaceful revolution that would see East Germany disappear, and by domino effect, bring about the end of Eastern Europe’s Communist regimes. However, no prominent Chinese will be there.

The main news item carried by Chinese newspapers and the Xinhua news agency today was the pledge made by Chinese Prime Minister Wen Jiabao to provide hungry Africa US$ 10 billion worth in aid. The second most important story related the meeting between President Hu Jintao and top air force brass.

In the last two days, Xinhua has only published photos of the Berlin celebrations, without any commentary.

Looking beyond the 4000 km border.

Every now and then China India border attracts political and media attention. Today the issue of the border is in the news again because of Dalai Lama's visit to Arunachal Pradesh. But borders need not be looked upon as territorial boundaries, completely isolating the two sides.
Even recognising the border dispute, and working to find a peaceful solution to the actual coordinates of the border, it should be possible to open the frontier allowing not only greater exchange of goods, but also encourage an interaction between the people on both sides. The potential seems huge, not just in terms of trade, but more importantly in building trust and understanding between people living in these areas, and meet their developmental and cultural needs. Would a free trade zone, in the border areas, be more effective than a free trade agreement between the two countries?

Nimmi Kurian, explores some of the possibilities, in her article in Indian Express, Nov 9, 2009, titled "A forgotten 4,000 kilometres".

Some of this reductive logic is also more than evident in the fact that, even as bilateral trade is expected to surge to $60 billion by year-end, much of it has passed the borders by. Despite the fanfare that greeted the resumption of border trade at Nathu La after 40 years in 2006, two-way trade has not even reached a quarter-million dollars. India-China collective imaginations remain caught in a time warp with border trade struggling with an archaic list of items that hark back to another era. Yet another example of our continuing fascination with the symbolic over the substantive.

If these fractured geographies are to be restored, creative ways of thinking out of the territorial trap has to be a first. It will mean appreciating that there is more to borders than lines of control or establishing hotlines and holding flag meetings. These will call for recasting ageing agendas and releasing the borderlands from the freeze frame of securitised narratives. Unbundling the idea of cooperation will for instance mean looking at shared co-governance challenges that a shared neighbourhood brings. The India-China borderlands are witnessing a huge developmental thrust and China’s goal of developing its south-western holdings coincides with India’s own domestic imperative, rapid development of the Northeast. These raise larger questions of micro-level governance, livelihood and poverty — which find no place within politico-military frames of decision-making, that offer solutions suboptimal at best. It will also call for exploring a common analytic framework within which promising new ideas on trade, tourism, conservation, climate change and resource governance can be addressed.

This will also be an opportunity to decentre some of these debates since these are not challenges that can hope to be solved long-distance, from distant capitals.

Prospect for China India FTA?

Sino-India trade has been growing at about 50% annually over the past decade. It is estimated to reach $60 billion by the end of 2009-10, growing from barely $2.3 bn in 2001. Since 2005-06, India's trade deficit has grown too, and put at over $20 bn, in 2008-09.

Suparna Karmakar writes in the Hindu Business Line newspaper, on Nov 6, 2009, about a study done at the Institute for South Asian Studies at the National University of Singapore, in an article titled "Wiring up Sino-Indian trade".

• China accounts for 10.7% of India's total imports.
• The top five Indian imports from China (at two-digit level) comprise electrical and electronic machinery, organic chemicals, iron and steel, mineral fuels, and waxes; constituting 2/3 of the total imports.
• About 45.85% of the imports last fiscal comprised electrical and electronic machinery, comprising 30% of India’s total imports last fiscal.
• In contrast, India’s exports to China are dominated by resource-based and labour-intensive products. Mineral products (for example, ores, slag and ash, salt and sulphur, and mineral fuels and oil) are prominent exports; ores comprise more than half of them.
• India’s major exports to China are very different from its main exports to the rest of the world.

In this back drop, what is the prospect for an FTA? Ms Karmakar writes,

A quick analysis of trade data shows that the increasing trade deficit of India vis-À-vis China emanates in the very product categories which in value-terms are among India’s top five exports (at two-digit level) to the rest of the world. China is an important supplier in these key product categories, namely, mineral fuels, electronic and electrical machinery, iron and steel, and organic chemicals. Given the high intra-industry investment, production and trade in these key export industries, an FTA with China that assures reliable and assured supply of intermediate inputs may help boost India’s manufacturing efficiency and international competitiveness.

But she also notes two critical factors.

• Indian industry associations remain extremely wary of the proposed Sino-Indian goods FTA.
• In 2008, the Government also agreed that an FTA with China was not a ‘priority’.

The burden of being the Dalai Lama

Today, front page headlines in China and India report on the possible impact of Dalai Lama on the relations between the two countries. Can one man really cast such a large shadow on two of the world's largest countries, and oldest civilisations? China is opposed to Dalai Lama visiting the north eastern Indian state of Arunachal Pradesh, accuses him for trying to damage relations between the two countries, and yet affirms that relations will not be affected. Here is a sample from Chinese and India media. What is amazing is the fallout even in Dhaka! Reuters news agency is focusing on the tension between China and India this month, and list this among the five political risks to watch in India.

Hindustan Times: Reshma Patil writing from Beijing reports, "Dalai Lama damaging ties with India: China", on Nov 3, 2009.

While tensions between India and China spill over with visa controversies on both sides, Beijing has now blamed the Dalai Lama for trying to damage ties.
On Tuesday, Beijing labelled the Tibetan spiritual leader’s visit to Arunachal Pradesh a ‘separatist’ anti-China action. “The Dalai Lama often tells lies... he’s a national separatist. This attempt to damage relations between China and the relevant countries will not succeed,’’ said foreign ministry spokesman Ma Zhaoxu at a media briefing.

Indian Express: "China attacks Dalai Lama for hurting Sino-India ties", 4 Nov 2009

China on Tuesday accused the Dalai Lama of seeking to undermine Beijing's relationship with Delhi through a visit to a disputed border region, insulating India's government from direct Chinese wrath over the dispute. The exiled Tibetan spiritual leader has riled Beijing by arranging a trip week to Arunachal Pradesh, parts of which China claims as its own. The Chinese government has condemned the trip several times and asked Delhi to stop it going ahead.

Daily News & Analysis: Seema Guha reports, "China attacks Dalai Lama but spares India", on 4 Nov 2009.

China's opposition to the Dalai Lama was expected. What was not was the fact that at Tuesday's regular news conference in Beijing, while foreign office spokesperson Ma Zhaoxu lashed out at the Tibetan spiritual leader, he did not include India in his criticism.

CCTV: Provides a video footage of the spokesman of Chinese foreign ministry, with the headline, "Dalai Lama's scheme of damaging Sino-India ties "come to nothing": Spokesman" on Nov 4, 2009.

Chinese Foreign Ministry said on Tuesday that the Chinese government is deeply concerned by the Dalai Lama's planned visit to a border region between India and China.
Spokesman Ma Zhaoxu repeated an earlier condemnation of the Dalai Lama for separatist activities.
Ma said the scheme to harm China's relations with India would come to nothing.

Xinhua: The Chinese news agency reports, "China voices firm opposition to Dalai Lama's visit to China-India border region" on Nov 3, 2009

China firmly opposes the Dalai Lama's planned visit to a China-India border region, said a Foreign Ministry spokesman here Tuesday.
"China's stance on the eastern section of the China-India border is consistent, and we firmly oppose the Dalai Lama's visit to the region," said Ma Zhaoxu at a regular news briefing.
"This further exposes the Dalai clique's anti-China and separatist nature," said Ma.
Ma said the Dalai Lama keeps lying and being engaged in damaging relations between China and other countries, but his attempt "will not succeed."

Zee News: Earlier the tv channel had quoted the chief minister of Arunachal Pradesh as saying "Dalai Lama will be our state guest", on Oct 28, 2009.

Notwithstanding Chinese objection to the Dalai Lama's proposed visit to Arunachal Pradesh, Chief Minister Dorjee Khandu on Wednesday said the Tibetan spiritual leader will be accorded the honour of 'state guest' during his week-long tour beginning November 7.

Frontline: The cover story of this fortnightly news magazine, dated Nov 7, 2009, is on China. Sushanta Talukdar writes in "China Factor",

The elections in Arunachal Pradesh, which would have otherwise gone unnoticed owing to the small size of its voter population and of the State Assembly, got global attention because of the war of words and the subsequent diplomatic engagement between India and China over the latter’s claim to the border State. The dispute overshadowed the election campaign as well.

The New Nation: Headlines "Police stop photo exhibition on Dalai Lama in Dhaka", on Nov 2, 2009.

Drik Gallery from yesterday focusing on Dalai Lama, which was to have ended on November 7. Police stopped the exhibition as it was being held "without permission of the concerned authority of the government." Police described it as a "sensitive issue."
However, Tanvir Murad Tapu, one of the organisers, said such exhibitions had been being organised for the last 25 years without any interruption. The images portrayed the journey of Tibetans from their homeland to exile, said organisers.
After police locked the gate of the Drik Gallery Prof Muzaffar Ahmed of Transparency International Bangladesh, who was to have inaugurate the function, said such exhibitions could be shown even in China, but the government in their enthusiasm to please a powerful government injured censorship in their own country, a press release said.

Reuters: "Relations with China among Five political risks to watch in India", the news agency notes on 3 Nov 2009. Tensions between India and China are in focus this month at Reuters, with the Dalai Lama visiting the Indian state of Arunachal Pradesh, and another round of talks on a disputed border area set to begin. Under the head of external security, Reuter notes the India's relations with Pakistan and China, and says,

Ties between India and China have soured with the resurgence of a long-festering border dispute over the Indian state of Arunachal Pradesh. Reports of border incursions sparked unease. India also balks at Beijing's support for projects in Pakistan-controlled Kashmir and a separate visa policy for Indian Kashmiris, which New Delhi sees as undermining its claim over the region. There is little chance of war between the two countries but further disputes could sour their booming trade relationship.

Key issue to watch:
-- The Dalai Lama's planned trip to Arunachal Pradesh on Nov. 8 has already raised hackles. Beijing strongly opposed the visit, which it says is part of the exiled Tibetan monk's separatist scheming. India has dug in its heels, calling the Dalai Lama an "honoured guest" whose visit has no political motive.
-- The next round of talks over the disputed border with China in mid-November. Years of dialogue on the future of Arunachal Pradesh have made scant progress, but the talks open a window for both sides to diffuse tensions.

Why China Isn't Ready to Lead

I recently came across these two interesting articles by Prof Victor Shih. Mr Shih, an assistant professor of political science at Northwestern University, is author of “Factions and Finance in China:” (Cambridge University Press, 2008). He blogs at Elite Chinese Politics and Political Economy.

In recent months, with the global economic slowdown, there has been a lot of talk about the role of emerging economies, in particular that of China, in helping to put the world economy back on track. But Prof Shih says, in an article in the Wall Street Journal on 22 Oct 2009, "why china isn't ready to lead" the world,

To lay credible claim to a bigger global role, Beijing must show it understands the rules that make a modern economy work and how to play by them. The economic downturn has only shown how far behind Beijing is in this regard. China's market institutions clearly lag those in more advanced Asian and Western countries. Parts of the government continue to blatantly disregard property rights and contracts. Rules are conveniently bent to favor powerful state entities.

In an earlier article, again in the Wall Street Journal, on 22 July 2009, titled "China takes the brakes off". Prof Shih says,

The official Chinese press recently issued a series of stories celebrating an apparent recovery of the country’s growth rate to 8%. By all appearances, China has once again deployed its enormous state capacity, including state control of the banking system, to ward off a recession. However, unlike the last major stimulus program in the late 1990s, this stimulus relies on an unconstrained credit expansion and is generating much fewer marginal benefits to the economy. Quite the opposite: Out-of-control credit expansion contains the seeds of future financial problems.

Chindia trade solution

Economic cooperation can overcome border tensions, writes Amitendu Palit and Alec van Gelder in the Wall Street Journal, 2 Nov 2009.

This is the latest flowering of an ancient relationship. The busy Southern Silk Route connected the Sichuan basin in China and the Gangetic plains in India for almost 3,000 years, and it never completely disappeared. This promoted exchange of saffron and silk and the flow of Buddhist pilgrims and practices. Maritime silk trade further strengthened economic ties during the Middle Ages. India and China accounted for 48.9% of world output in purchasing power parity terms in 1820 before colonization and the rise of the West. Today, despite popular suspicions, ordinary Indians and Chinese again are discovering that trade turns enemies into colleagues... ...

Beneath fiery rhetoric from both sides on issues like the border and broader political influence, China has quietly emerged as India's most important trade partner, and India is an increasingly important partner for China. Since China joined the World Trade Organization in 2001, Sino-Indian bilateral trade has grown to $40.6 billion a year from $2.3 billion—an average 50% increase every year. Since 2003-04, bilateral trade has grown at almost double the rate of their trade with other countries... ...

China and India are an ideal match: India's technology and services-oriented companies complement perfectly Chinese manufacturing and infrastructure prowess. India also stands poised to benefit from the investments of cash-rich Chinese companies. India's telecommunications infrastructure has received a massive boost from Huawei Technologies' $100 million research and development facility in Bangalore, producing cutting-edge optical networks. Major Indian information technology companies like Infosys, Tata Consultancy Services and Satyam already have operations in China, as do pharmaceutical firms such as Ranbaxy and Dr. Reddy's Laboratories. Supply chains are now more likely than ever to run through both Chinese and Indian companies. One example is the far-reaching Lenovo production network, with both Chinese and Indian factories... ...

Politics is the greatest barrier to the continuation of these healthy trends. Hostility surfaces time and again over the disputed border regions and issues like Tibet. However, the meteoric rise in bilateral trade over the past decade could force Beijing and New Delhi to rethink their relationship—including the insight that renewed aggression would threaten each other's prosperity... ...

Please read the original article here.

Experiences from China and India: Enterprises’ Capital Freedom, Financial Logic, and Wealth Creation

Conference Hosted by the Cathay Institute for Public Affairs (CIPA)

Beijing, 11 Nov 2009

Agenda

Session One: the Enterprises’ Capital Freedom Index in China : the Release Ceremony and Discussion on the New Book and the Latest Research Results Concerned

Moderator: Prof Mao Shoulong

13:30-14:00

Release of “the Report on Enterprises’ Capital Freedom, 2009”
Opening Speech by Feng Xingyuan

a brief time set aside for the Authors (including Feng Xingyuan, Xia Yeliang, Mao Shoulong, and ZhuHengpeng, et al.) to take the questions from media and the audience（20 minutes）

14:00-14:40

the Ceremony for Releasing “the Report of the Enterprises’ Capital Freedom,2010” as well as the Enterprises’ Capital Freedom Index of the Respective Provinces, Municipalities and Autonomous Regions in China

Announcement of the Scores and Rankings of the Enterprises’ Capital Freedom Indexes of the Respective Provinces, Municipalities and Autonomous Regions in China

A report delivered by Zhu Hengpeng: “the Capital Freedom Index of Chinese Enterprises: the Index System, Measures and Implications”

15:40-15:00 Comments and Discussion

15:00-15:15 Tea Break

Session Two: On The Development and Hindrance of the Enterprises’ Capital Freedom in China, Financial Logic and Economic Growth

Moderator: Feng Xingyuan

15:15-16:00

The Development and Hindrance of the Enterprises’ Capital Freedom in China By Xia Yeliang
Capital Freedom or Capital Regulation? By JN

Comments and Discussion

16:00-16:30

on the Essential Ideas of the Book “Financial Logic” and the Creation of Wealth in China By Zhou Ye’an

Comments and Discussion

16:30-17:15

On the Financial Freedom and Financial Development in India By Dr. Amitendu Palit, visiting researcher fellow in the Institue of South Asia, Singapore

17:15-17:30

Comments and Discussion

17:30-17:35

Concluding Remark by Mao Shoulong

17:35 End of the Conference

Contact: Chaoliang Jiang (jingchaoliang@gmail.com)

Is Chindia a Chimera? Are the two Asian giants inevitably pitted against each other?

Omkar Goswami, a noted economist and opinion maker, in a recent column in the weekly magazine, the Businessworld, 31 Oct 2009, looks at the state of China India relationship, and says that China can not be a friend of India, and calls for rapid growth, strengthening of border, and ties with US, Russia and others.

The pro-China groups in India are barking up the wrong tree. They don’t, and won’t, understand that China doesn’t give a fig about India. It has a very simple two-fold view of itself: to be the most powerful and influential nation in Asia and, with the US, become the Club of Two that defines global polity. India has no place in this scheme; and China will never hesitate to put us down if there is the slightest hint of our questioning this dual mandate.
The Chinese politicians are also quite contemptuous of India. Since they care nothing about vox populi, they see no merit in our democracy and elections. Instead, they see great demerit in our inability to force a more rapid pace of growth. In their eyes, we are a second grade country with poor roads and highways, poor manufacturing, severe power shortages, horrible urban infrastructure and significant poverty that is demanding greater rights in global capitals... ... ...
China is no friend of India’s. It is, at best, an occasional bedfellow that can suddenly leave you in the lurch. China cares only for China, and if India helps in furthering China’s interests, it can tag along. Otherwise, it will be cut out. We can’t think of allying with China with any degree of permanence. Unfortunately, we still don’t seem to understand that. One day, we will. Hopefully, before it is too late.
The solution is to be real. To realise that we need to significantly strengthen our borders; call their bluff with credibility; focus on rapidly growing the economy; and build strong relationships with the US, Russia and certain key nations in Asia. And to never shirk from telling them to back off when they intrude into our affairs. That requires a strong state with a sophisticated veneer... ... ...

Historically, the two of the oldest civisilations in Asia, had never clashed, till 1962. While there were some trade and occasional contact across the Himalayas through Tibet, most people on one side of the mountains perhaps had little idea of those on the other side. Given this past, will the realpolitik of the present colour the future permanently?

Talking trade

Beijing Review, the influential and official weekly news magazine, has become the latest vehicle for public diplomacy between China and India. Just this attempt to talk about trade on a public platform is a very welcome step.

In an article titled, "Stumbling Blocks for China-India Trade", on 17 Sept 2009, excerpts from a report on bilateral economic relations by Economic Information Daily was published. Below is the response of the Indian embassy in Beijing, published on 1 Nov 2009.

While China India trade has grown rapidly, in the past seven years to over $ 51 billion in 2008, this is less than 2% of China's total foreign trade volume, and less than 6% of India's total. An article in the influential and official news weekly, Beijing Review, on Sept 17, 2009, outlines some of the problems on the economic and political front that it believes affecting relationship between the two neighbours. Statistics from China's Ministry of Commerce show that, in the past seven years, Chinese-Indian trade volume has enjoyed an average annual increase of 45 percent. Among all of China's main trade partners, India retains the highest growth rate in trade volume with China.

• - Indian exports to China, it has been noted, are mainly primary products, with minerals and agricultural products representing more than half the total. By contrast, Indian imports are largely machinery products, chemical products, metal products, fibers and textiles from China.
• - Indians export to China are resource-intensive, or labor-intensive products, while what they import from China are manufactured goods with high added value. This trade structure, in turn, leads to a limited market share of Indian goods in China and a great risk of trade deficit.
• - When it comes to trade protectionism, India is a forerunner around the world. Except an average duty of nearly 30 percent on manufactured goods, India keeps a series of extra charges, coupled with complicated non-tariff measures.
• - India's domestic investment atmosphere features onerous administrative interventions, excess formalities and low efficiency—factors that could hinder the further development of Chinese-Indian economic and trade relations.
• - Anti-dumping investigations covered a wide range of goods, including industrial salt, iron and steel, auto parts, coal products, porcelain, textiles and rubber products, which led to a total loss of $1.5 billion for Chinese merchants.
• - India imposed a ban on Chinese toys, and has also imposed safeguard tariffs on Chinese goods, such as aluminum shields.
• - The sea route between the two countries is long and costly. While the land route, through Myanmar and Nathu La, are being reopened, the conditions are very poor.
• - Bilateral understandings between Beijing and New Delhi are far from sufficient due to their limited exchanges, mutual trust is superficial and, in ways, fragile.
• - Indian fear of China's rapid development, along with an aversion to Chinese products, has diminished the Chinese market in India.
• - Some Indians are wary that China's cooperation with Pakistan, might be a threat, thus prompting them to hold a defensive posture.

On Oct 29, 2009, the Indian Embassy in Beijing, responded to the above article in "Striving for win-win solutions"

• - The two countries should realize that each "has a vested interest in the success of the other" before they can jointly create a bright future.
• - When it comes to political trust, few can dispute that the two countries have come a long way in the last two decades. The frequency of contacts at the leadership level is unprecedented.
• - During Chinese President Hu Jintao's visit to India in November 2006, the two countries set themselves a bilateral trade target of $40 billion by 2010. This was reached two years in advance, in 2008.
• - Trade imbalance between China and India is indisputable. Indian exports to China are mainly primary products while Chinese exports are largely manufactured goods with high added value.
• - India manufacture value-added goods like electrical products, machinery, plastics, organic chemicals, chemical products and iron and steel, but it actually has penetrated the Chinese market in a very limited way in each of these categories. Restricted market access and tariff/non-tariff barriers have limited the scope for growth.
• - Local content stipulations have also constrained India's ability to compete in the Chinese market.
• - Sharp increases on import duties of completed equipment have obviously had their intended impact.
• - On October 11, India decided to terminate safeguard investigations against the import of passenger car tires from China.
• - Despite a memorandum of understanding on the application of phytosanitary measures concluded in 2002, China has provided India with market access to only three out of 17 varieties of fruits and vegetables that had been sought.
• - The real limitation is the old mindset that views bilateral relations as a zero-sum game, rather than striving to create win-win solutions. It is when each country realizes that it has a vested interest in the success of the other that we can be truly confident of our joint future.