'It Has Truly Been An Eye-Opener'

Mr Minister, Chairman of the China Council for Promotion of International Trade, Friends,

It is a great pleasure for me to be here today, among the premier business representatives of one of the mostdynamic economies in the world today. On this visit, I have been in Beijing now for just over a day. Butwherever I have been in this city, I saw the pace of economic change and could sense the urgency of themodernization drive. It has truly been an eye-opener.

I must note that the Indian business delegation accompanying me on this visit is among the largest that hastravelled with me on my official visits abroad. This says something about the potential which Indian trade andindustry circles see in economic cooperation with China.

I have had the privilege to witness three distinct phases of economic change in this country. I first camehere in 1979, just after the "Four Modernizations?were adopted. I came again in 1993, when Senior LeaderDeng Xiaoping had just launched the second phase of your economic reforms. Now in 2003, we see the country’sambitious plan to quadruple its GDP by 2020. Judging by your past performance, I have no reason to doubt thatyou will also achieve this extraordinary target. China is today the world’s fastest growing economy and issecond largest in purchasing power parity. Your achievements in the economic transformation of your countryare truly remarkable and I congratulate the Chinese government and people for them.

While our expansion and growth rates have lagged behind China, the Indian economy has also made impressivestrides in the last decade or so. In the last 12 years, we have recorded an average annual growth of nearly 6per cent. India is the world’s fourth largest economy on purchasing power parity. Our trade with the worldhas also recorded a steady annual growth of over 8 per cent in the past decade. We can now say with somecertainty that Indian private business and industry has come of age in a rapidly globalizing world. Indiancompanies are now acquiring brand recognition abroad in cutting edge areas like Information Technology,biotechnology and pharmaceuticals. The Forbes 200 ranking last year of the world’s best small companiesincluded as many as 13 Indian companies.

The twin objectives of my visit to China at this stage were :

1. to establish close relations with the new leadership of your country, and 
2. to impart a fresh momentum to the comprehensive cooperation which India and China are in the process ofbuilding.

I must say with great satisfaction that my meetings with the leadership of China have been excellent. Theyhave confirmed that the desire to build stable, enduring and forward-looking ties of friendship is shared bythe highest political levels in both countries. 

Some of the results in economic cooperation have already been quite encouraging. Our bilateral trade has beengrowing rapidly. Though it is from a relatively narrow base, the recent annual growth rate of 30 per cent inour bilateral trade is quite significant. In the first four months of this year, bilateral trade registered anastonishing growth of about 70 per cent. China now accounts for about 4 per cent of India’s foreign tradeand this proportion is rising. At this rate, the bilateral trade target of 10 billion dollars ?which had beenmentioned during the Chinese Premier’s visit to India last year ?is likely to be attained soon. 

Equally importantly, bilateral investments have started picking up. There are about 15 Chinese companies inIndia and 71 projects set up by Indian firms in China. Although the net investment figures are not as yet verylarge, the symbolism of two of the largest developing countries investing in each other’s economies isimportant. 

Speaking at the Peking University yesterday, I had drawn attention to the many commonalities between India andChina, which have created potentially rewarding synergies. Both have large populations, growing economies, anda majority of our people dependent on agriculture. Shared economic, social and ecological problems createopportunities for closer cooperation. 

There was a period in the India-China relationship when our preoccupation with our differences prevented apragmatic understanding of the mutual benefits from cooperation. Our present course of developing all-roundbilateral cooperation, while simultaneously addressing our differences, has transformed the quality of ourrelationship. This has helped to further narrow our differences and to accelerate our cooperation. 

Of course we have much further to go to realize the full potential of our partnership. We have, first andforemost, to bridge the information gap between the business communities of our two countries. There has to befar greater exposure in each country of the opportunities available in the other. This would help to diversifyour trade basket. It would also ensure that we first look within our countries for solutions to our economicneeds, before we turn to the developed countries. 

Our two governments have decided to make a concerted effort to move our economic cooperation to greaterheights. Premier Wen Jiabao and I decided yesterday that we would form a Joint Study Group of economists andofficials from our two countries to review existing cooperation, to identify new areas of promise and to drawup a comprehensive perspective plan for the further development of a multi-faceted economic interaction. Thisis an initiative which will require meaningful inputs also from business and industry of India and China. 

For a rapid expansion of our economic interactions, it is very important to strengthen passenger and cargotransportation links, banking support stuctures and trade facilitation measures. While governments on bothsides can work to address these insfrastructural problems, it is for private business and industry to optimizetheir utilization.

This is a business seminar and innovative ideas for progressing the India-China economic partnership invarious areas should really emerge from your deliberations. I cannot lay down either policy prescriptions oraction agendas for this endeavour. I would only like to affirm to you that the leadership of our two countriesbelieves in the huge potential for our economic and commercial cooperation. We are committed to createconditions which would facilitate the rapid growth of this cooperation. This provides a strong politicalunderpinning to your endeavours. I hope you can build on it constructively and creatively.