Sino-India: More convergence than divergence


The way ahead is to focus on the political economy of complementaries and synergies between India and China
The Modi-Xi informal Wuhan Summit of May 2018 has contributed to Sino-India relations both in discourse and practice. However, given the geo-economic depth in relationship that the people of the two countries are seeking, there’s more to be done.

For this, the role of scholars and think-tanks is imminent. They can actually engage in thematic deliberations and provide pragmatic roadmap to their respec tive policy makers. On the table, they can converge and have divergences too. At a recent interaction between Indian and Chinese scholars at the Pangoal Institution in Beijing, both sides expressed their appreciation for the Wuhan Summit and also seemed wary on trade issues and protectionism.

But they had their own intellectual discomfort on the issue of bilateral trade imbalance.

Sino-India geo-economics is a complex phenomenon characterised by historical contexts and political narratives, and is reshaped every day by popular media representations in both countries. But the bilateral engagement must move on to the next level and the following points need utmost attention.

Trade issues
First is the issue of trade imbalance. India’s export to China stood at approximately $13 billion in 2017 of which just three sectors — organic chemicals (29); ores, slag and ash (26); and copper and articles thereof (HS Code 74) comprised a third of it. Moreover, imports from China accounted for approximately $72 billion in which just two sectors — electrical machinery equipment and parts etc. (HS Code 85); and machinery, mechanical appliances & parts etc. (HS Code 84) constitute more than 50 per cent of the total import.

Statistics reveal that in the total bilateral trade of $85 billion, India faces a negative trade balance of approximately $60 billion, which is a cause of concern. In the Beijing deliberations however, the Chinese scholars held a view that as India is industrialising, its imports from China are likely to increase disproportionately.

On the contrary, the Indian viewpoint is that the two countries need to focus on intra-industry trade, and work toward diversifying the trade basket, so that trade in other sectors can also increase. Moreover, there are marked similarities between their manufacturing policies — “Make in India” and “Made in China 2025”.

Both countries thus need to give more policy attention on liberalising investment regime and reducing supply-side constraints.

Secondly, the non-tariff barriers (NTBs) are a cause of concern. The Indian scholars raised the issue of NTBs imposed by China on Indian goods. These NTBs pertain to stringent rules on product certification and labelling standards; delays in customs clearances; and even restrictions related to port operations for re-exporters. In fact, in June, China expressed its desire to reduce tariffs on 8,459 goods from India and few other Asian countries in sectors like chemicals, agriculture, soybean, clothing, steel, aluminum etc.