PM’S address at the India-China Economic, Trade and Investment Summit
His Excellency Vice-Premier Hui Liangyu, Mr. Yu Ping, Vice-Chairman of theChina Council for the Promotion of
International Trade, Shri Kamal Nath, Minister for Commerce & Industry,Business Representatives from China and India
Ladies and Gentlemen.
I am delighted to have this opportunity to meet you today.
The India-China Economic Trade and Investment Summit is a unique gathering ofbusinesspersons representing the two most populous countries of the world. Youhave grown competitive by starting from continent - sized markets and graduatingto world markets. You are the symbols of the growth stories in India and China.We salute your dynamism and entrepreneurship.
Your meeting today is an expression of your confidence in the potential foreconomic cooperation between India and China. It is equally a testimony to theprogress that business communities from both sides have made in working witheach other.
India and China are today the fastest growing large economies in the world. Weshould remember that China, India and Europe had almost equal shares of worldincome in the early 18th century. As the 21st century unfolds, both India andChina stand poised to regain their weight in the global economy.
Our two countries will need to work together to ensure that we contribute to,even as we benefit from, the economic resurgence and integration of Asia. Ourtwo economies are becoming engines of economic growth and must use our naturaland human resources, technology and capital for the common benefit of theregion.
The Indian economy has witnessed growth rates of close to 9% per year in thelast three years. Our macro-economic fundamentals are strong. We have undertakena series of economic reform measures to facilitate investment and growth. Oursavings and investment rates have increased to 35% of our GDP and are rising.With a predominantly young population, there is potential for further increasein these rates.
Although India is more integrated with the global economy than ever before, thegrowth has been largely fuelled by an expanding domestic market. All thesefactors give us confidence that we will be able to step up our annual growthrate to 10% within the next five years.
Our bilateral trade with China has doubled in the last two years. Our tradetarget of 20 billion US dollars by 2008 was reached two years ahead of schedule.The revised target of 40 billion US dollars by 2010 is also likely to beachieved two years ahead of schedule.
This makes me wonder whether our two Governments have been underestimating thecapabilities of our respective industries and their strong urge to do businesswith each other. We therefore propose to set more ambitious targets.
In the area of trade, the challenge before us is to diversify our export basketto China. I would urge Indian business to vigorously pursue opportunities forexpanding non-traditional items of export. Such efforts, when matched by greatermarket access for Indian goods in China, will help to bridge the rising tradedeficit between us.
In addition to our competitive manufacturing industries, India has a diversifiedagricultural production base. Our food processing industry is also growingrapidly and we can supply quality agricultural and marine products to theChinese market. A conducive environment should be created for this trade toexpand.
The services sector accounts for more than 50% of India’s GDP and more than40% of China’s GDP. India has had considerable success in positioning itselfin hi-tech services in world markets. There are enormous opportunities for bothIndia and China to expand trade in services, particularly in construction andengineering, education, entertainment, financial services, IT and IT enabledservices, transport, tourism, and health. We will work together with the Chinesegovernment to remove administrative barriers and simplify regulatory regimes inorder to move forward in these areas.
Chinese companies have been actively engaged in the Indian market. I understandthat Chinese firms have contracted projects in India worth over 12 billion USdollars. Indian majors have set up a number of joint ventures or subsidiaries inChina in the pharmaceuticals and software sectors, among others.
We must strengthen the base of our economic cooperation through businessalliances and collaboration in technology transfer and development. We seek topromote bilateral investments in traditional sectors such as petrochemicals,steel, healthcare, IT and automobiles. Equally, our entrepreneurs should exploreopportunities in new areas such as biotechnology, advanced materials, renewableenergy and low carbon technologies.
I would suggest a three-pronged strategy for the chambers of industry andcommerce of both countries to achieve these objectives. Firstly, you shouldjointly develop a strategic plan for the future so that you have a vision of oureconomic cooperation and a road map for its implementation. This will ensurethat a long-term strategic perspective that looks ahead to future challenges andopportunities guides our ties.
Secondly, you could develop profitable business models that factor in ourcomplementarities and competitive strengths and the special needs of largemarkets like ours. The opportunities are many and innovation is the key toexploiting them.
Lastly but equally importantly, you need to acquire insights into each other’smarkets, business customs and management styles. In the final analysis, doingbusiness is about developing understanding and trust in your partners.Additionally, the business communities of our two countries should develop adeeper understanding of the macro-economic outlook, the regulatory regimes andof factors that have a bearing on the competitiveness of enterprises.
I am glad to know that the number of visitors exchanged between our twocountries approached the half million mark last year and direct flightconnections have risen to 22 a week. We need to encourage this growinginteraction, including through easier grant of visas.
I would like to assure this gathering that both governments will work togetherto put in place an enabling environment for greater trade, investment andeconomic interaction. This has to include creating a level playing field byaddressing such issues as non-tariff barriers, IPR protection and market-relatedexchange rates.
All countries must compete in global markets and such competition is notinconsistent with co-operation nor is it adversarial. The industrialisedcountries constantly compete with each other and they see this competition asconstructive and mutually beneficial.
Economic cooperation between us has become a principal driver of our strategicand cooperative partnership for peace and prosperity. Several bilateralunderstandings and agreements are already in place to address different sectoralaspects which impact on our economic cooperation. India and China workingtogether should develop a habit of mutually advantageous cooperation.
In 2003, our two Governments had established a Joint Study Group to examine thepotential for economic engagement. Pursuant to this, a Joint Task Force hasfinalized its report on the feasibility of a India-China Regional TradingArrangement. During my visit, I look forward to discussing further steps in thisregard with the leadership of China.
In conclusion, I would like to congratulate the dedicated and hard-workingpeople of China for the rapid economic progress that they have made. I wouldalso like to thank the China Council for the Promotion of International Tradefor organizing this event, and making this partnership of the businesscommunities of our two countries possible.
