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Describing India and China as the “twin engines of growth” of Asia, Shri Kamal Nath, Union Minister of Commerce & Industry, has emphasised that there are several complementarities in the economies of India and China which can be capitalised on to achieve rapid and further expansion of trade and economic ties between the two countries on a mutually beneficial basis. Addressing the Session on “Beijing and Delhi – Navigating New Territories” at the meeting of the World Economic Forum (WEF) at Davos today, the Minister said the complementarities were reflected in the fact that India had a comparative advantage in IT software and China in IT hardware. Similarly, India’s strength in auto-components, pharmaceuticals & chemicals and machine tools were complemented by China’s strengths in electronics, toys and machinery. Therefore, “I do not see this as an ‘India Vs China’ debate, but rather in a ‘India with China’ context”, Shri Kamal Nath said.
The tremendous untapped potential of trade between India and China was borne out by the fact that “the India-China two-way trade is now 1 billion dollars a month, compared to 1 billion dollars a year, a decade ago. This twelve-fold increase in the last decade only goes to prove that though we are competitors in many respects (as is only natural for two large and rapidly growing economies), we are also complementary and supplementary to each other”, the Minister said, adding that for the last 15 years the Indian and Chinese economies had been growing twice as fast as the rest of the world.
In a broader context, Shri Kamal Nath referred to the new dimension and content in India’s “Look East Policy” and pointed out that whereas a decade ago trade with Europe constituted 30% of India’s total trade and with US 15% and with all of Asia only 20%, the roles had now reversed as India’s trade with Asia today accounted for 30% of her total trade. “If you take ASEAN, China, Japan, Korea and India together, you can visualise an integrated market whose size is that of the European Union (EU) in terms of income, and bigger than NAFTA in terms of trade. They account for half the world’s population and foreign exchange reserves exceeding those for the EU and NAFTA put together. The Prime Minister of India has proposed the establishment of an Asian Economic Community which would constitute an ‘arc of advantage’ across which there would be movement of people, capital, ideas and creativity”, Shri Nath said.
While emphasising the complementarities between India and China, Shri Kamal Nath also mentioned the similarities, emanating from their characteristic political and social structures. Having reached a considerable degree of integration with a global economy, “India is now wanting to focus on targeting greater foreign direct investment (FDI) and engaging more aggressively in international trade”, Shri Kamal Nath stated.
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